Athene enters reinsurance deal with Lincoln

Athene Life Re (ALRe), the Bermuda-based annuity reinsurance subsidiary of retirement services company Athene, has entered a block reinsurance transaction with Lincoln Financial Group, where it will reinsure around $7.7 billion of its annuity products.

ALRe has agreed to reinsure an 80 percent quota share of a $9.6 billion in-force block of fixed deferred and fixed indexed annuities on a modified coinsurance basis.

Lincoln will continue to service and administer police that are in force within the block.

Athene has deployed approximately $700 million of capital in aggregate to consummate the transaction, which includes capital to support the block and a ceding commission paid by ALRe.

“Following the flow reinsurance treaty announced last year, we are pleased to deepen our partnership with Lincoln Financial Group through this block reinsurance transaction on business that is well understood by Athene,” said Jim Belardi, CEO of Athene. “This is further evidence that Athene is well positioned and accepted as a solutions provider of choice because of our expertise, our strong capital position, and our ability to successfully close transactions that build long-term shareholder value.”

Further to this deal, Athene's board of directors has also approved an authorisation for the repurchase of up to $250 million of the company's outstanding common stock.

Athene suggested this will allow it to repurchase shares from time to time in large, opportunistics privately negotiated transactions, and provides flexibility for share repurchases through open market transactions.

“This new share repurchase authorization is consistent with our flexible and opportunistic approach toward managing shareholder capital,” said Jim Belardi, CEO of Athene.

“We have a strong track record of delivering mid-to-high teens returns on equity, resulting in 17 percent compound annual growth in adjusted book value per share over the past nine years. We continually evaluate the various high return capital deployment options available across our organic and inorganic channels, as well as our balance sheet. We believe the current market valuation of our shares significantly undervalues the embedded earnings power and attractive growth opportunities of our business. Today’s announcement introducing an opportunistic share repurchase authorisation represents a highly accretive capital deployment opportunity and reflects our board of directors’ continued confidence in our ability to generate compelling long-term value for shareholders.”