Iowa OKs Athene buy of Aviva

"The Company has been very cooperative. I think they have been very supportive of what we have been trying to do. I truly believe they are in for the long run," Mumford said. The conditions basically say, "we want to get to know you better as we go along," Mumford explained.

"If you look at this deal, Iowa and New York regulators are pretty much much together on this — these are pretty stringent conditions," Mumford said. 

On Wednesday, New York's Department of Financial Services (DFS) announced that Apollo Global Management had agreed to a set of heightened policyholder protections as part of Athene's planned acquisition of Aviva Life and Annuity Co. of New York, including similar dividend and transactional prior approvals, plus a separate backstop trust account totaling about $35 million for additional protections. 

"If they spend money wildly with purchases that aren't investment grade, we would be able to discuss that with them and make sure they change their investment practices," Mumford said. "The fact that they agreed to these conditions shows they are in for the long haul — they really don't have a way to get money out of the company without going by us and getting our approval," Mumford said.

Under the conditions, all funds going out of the insurer are subject to review, even the de minimus amounts. Mumford said. "We are going to look at every inter-company transaction." 

Athene Holding Ltd. Chairman Chief Executive Officer, Jim Belardi, stated in a release, "This is a transformative event for Athene, and we intend to continue our close working relationship with the IID as we complete this acquisition and integrate the two companies."

Belardi said in a phone interview last month that Athene, in its fourth acquisition of an insurance company (Aviva), is buying annuity players at prices that "are significantly below book value," a discount that "we translate that to lower cost of funding or increase reserve."

The liability cost is lower "so we can invest in a very safe, liquid asset portfolio without too much risk but with appropriate yields that satisfy our policyholders and our shareholders," Belardi said in the July 8 interview, a week or so before the public hearing in Des Moines on the Athene-Aviva deal.

The index annuity products have surrender charges "so we know the money will stay until we expect it to — so we can invest with certainty without having [to worry about abnormal surrender rates,]" Belardi said.

The reason why the current owners perhaps cannot make such a go of it is likely because "they bought the liabilities at a higher price than we did…we have a lower cost of funds…perhaps other companies bought at higher yields, higher prices," Belardi suggested.

Gerhart stated in his release today that, "going forward, this company will now join Iowa's other fine domestic companies in the same pattern of required financial filings and on-site examinations with which we have maintained Iowa's record for insurance company solvency for decades."

Iowa has not had an insolvency since 1988. 

After the expected closing of the Aviva acquisition in 2013, Athene will have approximately $58 billion of assets and $5 billion of equity capital. Aviva plc, the parent company of Aviva USA, is the sixth largest insurer in the world. Headquartered in London, it was designated a global systemically important insurer by the Financial Stability Board last month.