Athene Holding Ltd. — a life and annuity insurer and reinsurer — acquired a giant automobile and truck fleet company from Hertz Global Holdings Inc. Tuesday for $891 million in cash in its effort to diversify long-term investments.
Donlen Corp., the fleet manager, is a Bannockburn, Illinois-based business that owned an average of about 192,900 vehicles on any given day in 2020, according to the Hertz Form 10-K annual report for 2020.
Athene and Hertz first announced the Donlen deal in November 2020.
Jim Belardi, Athene's CEO, said in a statement that Athene wants to invest in Donlen and help the current managers continue to improve and expand the vehicle fleet.
The Donlen deal fits with Athene's strategy of "sourcing attractive, differentiated, long-term investments that deliver strong and consistent returns," Belardi said.
$27 Billion Deal With Jackson
Athene is a Hamilton, Bermuda-based company that ended 2020 with $203 billion in assets.
The company worked with Venerable to acquire a $19 billion block of fixed and indexed annuities from Voya Financial, through a reinsurance arrangement, in 2018.
The firm arranged to reinsure $27 billion in fixed deferred and non-variable indexed annuities for Jackson in June 2020.
Like other life insurers, Athene has faced the challenge of finding attractive investment opportunities at a time when the investment-grade corporate bonds life insurers traditionally prefer pay only about 1.2 percentage points more than comparable Treasury bonds.
Hertz Faces COVID-19
Hertz, the 102-year-old automobile rental giant based in Estero, Florida, sought protection from the U.S. Bankruptcy Court in Delaware in May 2020, after travel restrictions related to the COVID-19 pandemic slashed auto rental revenue.
Hertz recently arranged for a $4.2 billion cash infusion from affiliates of Cetares Opportunities LLC and Knighthead Capital Management LLC. The company is planning to emerge from the reorganization process in June as a publicly traded company, with about 80% of the shares owned by the holders of U.S. unsecured debt obligations.
Donlen Aspects
Donlen started up in 1965 and became one of the pioneers in the modern auto and truck leasing industry.
It offers many vehicle-related products and support services, such as lease financing, fuel management, accident management and toll management, in addition to providing the vehicles.
Hertz announced in September 2011 that it was acquiring Donlen for $177 million in cash and the assumption of $770 million in Donlen fleet debt.
Donlen produced $93 million in earnings before interest, taxes, depreciation and amortization in 2020 on $630 million in revenue, according to Hertz.
