Brookfield Re Makes $4.3B Offer to Buy American Equity

What You Need to Know

American Equity helped create the modern U.S. indexed annuity market.
In May, Brookfield Re and affiliates owned a 20.38% stake in the company.
American Equity said in a filing in May that it now sees Brookfield as a competitor.

American Equity Investment Life — a pioneer in the modern U.S. indexed annuity market — said today that it has received a $4.3 billion acquisition offer letter from Brookfield Reinsurance.

Brookfield Re and affiliates already control a 20.38% stake in American Equity, according to a report the company filed with the U.S. Securities and Exchange Commission on Monday,

American Equity has fended off at least two acquisition offers from other suitors in the past three years. The company’s board noted today that it helped Brookfield Re make the current offer by waiving a standstill provision in an investment agreement.

“The board will carefully review Brookfield Reinsurance’s proposal in accordance with its fiduciary duties and in consultation with its independent financial and legal advisors,” American Equity said. “American Equity will have no further comment on the proposal until the board has completed its review.”

What It Means

For the annuity market, the Brookfield Re offer shows that investors are still interested.

For agents and brokers, the proposed deal means that tracking what annuity issuers’ executives are thinking could become more difficult.

Anant Bhalla, American Equity’s CEO, has been blunt about matters such as the state of annuity market competition during the company’s quarterly conference calls with securities analysts.

American Equity

American Equity reported $124 million in operating income for the first quarter on $663 million in revenue. It ended the quarter with $75 billion in assets.

David Noble, the longtime president of Statesman Life, founded American Equity in 1995 after Statesman was acquired by the company now known as CNO Financial.

American Equity popularized the practice of giving holders of fixed annuities extra returns tied to the performance of a stock index or other investment index. It then backed life and annuity issuer and distributor efforts to keep the SEC from regulating the new indexed annuity products as securities.

The company ranked 11th in terms of U.S. individual non-variable indexed annuity sales in the first quarter, with $964 million in non-variable indexed annuity sales, according to LIMRA. It accounted for 4.2% of the non-variable indexed annuity sales reported to LIMRA.

Athene Holding and Massachusetts Mutual Life joined to make a $3 billion offer for American Equity in 2020. American Equity used a reinsurance deal with Brookfield Re to stay independent.

Prosperity Group, a company backed by Elliott Investment Management, made a $45-per-share offer, which valued the company at about $3.4 billion, in December 2022. American Equity objected to that offer, saying the price was too low, and Prosperity backed off.

Brookfield Re

Brookfield Re is an affiliate of Brookfield Asset Management, a Toronto-based financial services giant with about $825 billion in assets under management.