Besides investing in Prudential’s US business Jackson, Athene has also reinsured $27.6bn in its in-force fixed and fixed indexed annuity portfolio
UK-based insurer Prudential has agreed to sell an 11.1% stake in its US business, Jackson National Life Insurance, to Athene’s subsidiary Athene Life Re for $500m.
As part of the deal, Athene Life Re has also fully reinsured $27.6bn in-force portfolio of Jackson’s US fixed and fixed indexed annuity liability under a long-term agreement.
The investment from Athene Life Re is expected to support Jackson in pursuing various growth initiatives under its commercial diversification strategy.
The combination of investment and reinsurance transactions is expected to increase Jackson’s risk-based capital cover ratio by nearly 80% points.
Prudential Group CEO Mike Wells said: “We are delighted to be forging a new relationship with the team at Athene, given their deep expertise in the US annuity sector and long-term commitment to its development. This agreement is a key step forward in meeting our strategic objectives for Jackson.”
Athene will invest $1.2bn in Jackson in connection with equity investment and reinsurance
Athene expects that the transaction will be accretive in its adjusted operating income for next year and 2022. The company also expects to invest about $1.2bn in the next 12-18 months in connection with the transaction.
The equity transaction is expected to be closed next month and Jackson will have an anchor investor from Athene with long-term commitment and Prudential will gain strategic flexibility in relation to the business.
Prudential is also preparing for a minority initial public offering (IPO) of Jackson and is also evaluating other options to create an independent US business. Further details are expected to be revealed by the UK insurer during its half-year results in August.
Athene CEO Jim Belardi said: “We are very pleased to announce this mutually beneficial transaction in coordination with Jackson and its parent, Prudential plc.
“As top annuity providers focused on serving the US retirement marketplace, we are excited to bring these two leading franchises together through a large-scale reinsurance transaction that includes a new investment in Jackson by Athene.”
Jackson National Life Insurance chairman and CEO Michael Falcon said: “Today’s transactions with Athene, a leading franchise in the retirement services market, further strengthen our capital position and enhance our ability to grow.
“We value Athene’s investment in Jackson, which is aligned to our common goal of serving the growing population of American savers transitioning into and through retirement.”