It took nine months and a lot of regulatory wrangling, but Athene Holding Ltd. has closed on its acquisition of Aviva USA Corp. The new entity, now to be known as Athene USA, will make its headquarters in West Des Moines, Iowa, and operate as Athene's U.S. arm.
The purchase price, first set at $1.55 billion, closed $800 million higher than that figure. In a statement, the seller, Aviva PLC in London, attributed the increase to the repayment of a $290 million loan and "estimated earnings and other improvements in statutory surplus over the period from June 30, 2012 to Sept. 30, 2013."
Athene USA President Grant Kvalheim said in an interview with LifeHealthPro.com that the timing of the deal played out as expected, given the regulatory approvals needed as well as the complexity of the deal. He noted that the acquisition was completed at the same time Athene closed on its sale of Aviva USA's life business to a subsidiary of Global Atlantic. Terms of that deal were not disclosed.
"We're gratified we received all the approvals we needed and also by the efforts of the regulators to understand what is a complex transaction," Kvalheim said.
Regulators in both Iowa and New York State approved the deal, but only after stipulating that Athene agree to more oversight, most notably higher reserve requirements.
The deal also raised concerns about the viability of private equity firms buying annuity businesses. Athene Holding's major shareholder is a publicly traded permanent capital fund managed by Apollo Global Management LLC. Critics, including industry competitors, point to private equity's propensity to buy and quickly sell holdings, a strategy they contend is a mismatch for long-term investment products like annuities.
Kvalheim countered that such assertions are "misinformation" and that Athene's capital is long-term in nature.
