Athene to Sell Aviva USA’s Life Insurance Business; Deal Contingent on Its Pending Acquisition of Aviva USA
May 8, 2013 by Fran Matso Lysiak
Best’s News Service – May 06, 2013 12:27 PM
PEMBROKE, Bermuda – Athene Holding Ltd. and its subsidiaries have agreed to sell Aviva USA’s life insurance business to Commonwealth Annuity and Life Insurance Co., a subsidiary of Global Atlantic Financial Group. The transaction, structured as a reinsurance arrangement, is contingent on its pending acquisition of the U.S. annuity and life insurance business of Aviva plc.
The U.K.-based Aviva plc in December agreed to sell Aviva USA Corp. to Athene Holding for $1.8 billion. The sale was the latest step in its strategy of winnowing down its international operations and focusing on “businesses and markets where Aviva enjoys leadership positions and is able to generate attractive returns with a high probability of success,” Aviva said (Best’s News Service, Dec. 21, 2012).
Aviva USA’s life insurance business includes business written by Aviva Life and Annuity Co. and Aviva Life and Annuity Company of New York. The sale will occur with the closing of Athene’s acquisition of Aviva USA. “This sale is consistent with Athene’s focus on becoming the leader in the fixed annuity segment of the retirement savings market,” Jim Belardi, chief executive officer of Athene, said in a statement. Athene sells products, including retail fixed and indexed annuities.
Athene, based in Bermuda, is backed by Apollo, a private equity firm (Best’s News Service, Jan. 13, 2013). Such firms are increasingly tapping into what they view as a potentially lucrative financial opportunity in fixed annuities, including indexed (Best’s News Service, Jan. 16, 2013).
As part of the acquisition, Global Atlantic plans to hire members of Aviva USA’s Iowa-based team to manage the life insurance business. The announcement “is good news for our employees, as it provides a bit more clarity about the future of our business. We have a tremendous amount of integration activity ahead of us as we separate our life and annuity businesses,” said Aviva USA in a statement.
Global Atlantic “intends to maintain a presence and employee base in the Des Moines area,” Aviva USA said.
As of the third quarter, Aviva USA was the top seller of indexed life insurance, but it’s been said publicly that Aviva’s life insurance block may not remain with Athene, Sheryl Moore, president and CEO of Moore Market Intelligence, told Best’s News Service earlier this year. Liberty Life Insurance Co., marketed as RBC Insurance, and today known as Athene Annuity & Life Assurance Co., exited indexed life once it was acquired by Athene (Best’s News Service, Jan. 16, 2013).
Global Atlantic Financial was founded in 2004 at Goldman Sachs and entered the life and annuity market by acquiring Commonwealth Annuity and Life Insurance, formerly Allmerica Financial, in 2005. Global Atlantic completed its separation from Goldman Sachs on April 30.
A.M. Best Co. on May 3 placed under review with negative implications the financial strength rating of A- (Excellent) and issuer credit ratings of “a-” of Commonwealth Annuity and Life Insurance Co. and its subsidiary, First Allmerica Financial Life Insurance Co. (both domiciled in Southborough, MA) and both ultimately owned by Global Atlantic Financial (Best’s News Service, May 3, 2013).
Aviva plc in November announced it intended to sell its U.S. business, a move that industry observers said could help the company reduce volatility and strengthen its balance sheet (Best’s News Service, Nov. 8, 2012).
Athene Holding was formed in 2008 by Belardi, formerly president of SunAmerica Life Insurance Co. and chief investment officer of AIG Retirement Services Inc., and Chip Gillis, former head of Bear Stearns’ insurance solutions group. Athene is funded by investors managed by affiliates of Apollo Global Management (NYSE: APO).
Athene Annuity & Life Assurance Co. currently as a Best’s Financial Strength Rating of B++ (Good).
Aviva Life and Annuity Co. and Aviva Life and Annuity Company of NY each currently has a Best’s Financial Strength Rating of A- (Excellent).
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com) BN-NJ-05-06-2013 1227 ET #
