The deal to snap up one of the last remaining independent annuities providers in the U.S. boosts Brookfield Reinsurance's assets under management to around $100 billion. In recent years, private equity heavyweights ranging from Blackstone Inc. to KKR & Co. and Apollo Global Management Inc. have invested in such companies as a way of gathering more capital they can plow into alternative assets.
Brookfield has emerged as the world's most acquisitive investment firm this year as the biggest private equity funds slow down amid a dearth of financing. The Canadian group agreed in June to buy Middle Eastern payment processor Network International Holdings for £2.2 billion ($2.8 billion), and it's leading a consortium that struck an A$18.7 billion ($12.5 billion) deal for Australia's Origin Energy.
A transaction would cap several years of takeover interest in American Equity from various suitors and add to the $16 billion of acquisitions of insurance companies announced globally over the past 12 months, data compiled by Bloomberg show. Brookfield Reinsurance is already the biggest shareholder in West Des Moines, Iowa-based American Equity with a roughly 20% stake, according to regulatory filings.
"Under its current leadership, AEL has been transformed into an innovative, asset light insurer," Brookfield Reinsurance Managing Partner Jon Bayer said in the statement. "Given the complementary nature of AEL's leading fixed annuity business to our existing platform, we expect to accelerate growth in collaboration with our distribution partners."
Brookfield Reinsurance's bid includes $38.85 per share in cash plus $16.15 per share in class A stock of Brookfield Asset Management Ltd. It plans to continue American Equity's push into alternative assets and would have Brookfield Asset Management oversee a large part of the company's portfolio.
American Equity has announced partnerships with 26North Partners, the private equity firm started by Apollo co-founder Josh Harris, as well as alternative asset manager Varde Partners and Agam Capital Management. It's also been ramping up its allocations to private assets.