Athene enters deal to reinsure Jackson annuities
Athene Holding has entered into a fixed annuity block reinsurance transaction with Jackson National Life Insurance, a provider of retirement products and a subsidiary of Prudential.
Athene Co-Invest Reinsurance Affiliate (ACRA) is supporting the transaction.
The deal sees Athene reinsure a $27 billion in-force block of fixed deferred and fixed indexed annuities, alongside a $500 million equity investment in Jackson. The equity position represents an 11 percent stake in the company, which Jackson will use to pursue growth opportunities. Jackson will continue to service and administer the in-force policies within the block.
The transaction is expected to be accretive to Athene’s adjusted operating income in 2021 and 2022, with potential upside as portfolio redeployment occurs. Athene expects to deploy approximately $1.2 billion of total capital in connection with the transaction to be contributed over the next 12-18 months. That includes a further investment of capital in connection with portfolio redeployment and the equity investment in Jackson.
By using ACRA, Athene is securing 63 percent of the total capital deployment from third-party investors, with 37 percent funded by Athene on a standalone basis. Athene maintains excess equity capital of $3 billion and total deployable capital of $7.1 billion.
Jim Belardi, chief executive of Athene, said the deal enables Athene to grow its gross invested assets by approximately 20 percent, with predictable liabilities it knows well.
“The deal was underwritten to a return that is consistent with our target for inorganic growth, with upside achievable through portfolio redeployment above forecasted levels,” said Belardi.
The reinsurance agreement has an effective date of June 1, 2020. The equity investment in Jackson is expected to close in July 2020, subject to customary closing conditions and approvals.
Mike Wells, group chief executive of Prudential, called Athene “a high-quality, well capitalised reinsurer,” while the deal is “a key step forward in meeting our strategic objectives for Jackson.”
