Brookfield Asset Management Inc. (NYSE: BAM) announced a strategic partnership with American Equity Investment Life Holding Company (NYSE: AEL), a leading retirement planning annuity provider. The partnership establishes Brookfield as a 19.9% cornerstone investor and reinsurance counterparty of AEL, supporting continued growth opportunities for the business.

AEL specializes in the sale, through independent agents, banks, and broker dealers, of fixed index annuities. These investment products support individuals in preserving their retirement dollars and provide a secure, predictable income.

The partnership reflects a meaningful investment for Brookfield in one of the leading originators for fixed index annuities and has the following strategic components:

• Brookfield will acquire a 19.9% ownership interest in the common shares of AEL in two stages: an initial purchase of a 9.9% interest at $37.00 per share promptly following required regulatory approval, and a second purchase of an incremental 10.0% interest, at the greater value of $37.00 per share or adjusted book value per share. The second equity investment is subject to finalization of certain reinsurance agreement terms, receipt of applicable regulatory approvals and other closing conditions and is expected to close in the first half of 2021. Brookfield will receive one seat on American Equity’s Board of Directors following the initial equity investment.
• A reinsurance transaction through which Brookfield’s reinsurance and annuity subsidiary, Brookfield Asset Management Partners, will reinsure up to $10 billion in annuity liabilities, including an initial $5 billion of existing liabilities and up to an incremental $5 billion of future business when written.
• AEL will receive unique access to Brookfield’s attractive alternative asset strategies, which positions AEL to generate sustained returns in a low interest rate environment.

Sachin Shah, Brookfield’s Chief Investment Officer, said: “We are pleased to be investing in American Equity and to partner with the business in reinsurance as it grows its leading position as a retirement planning annuity provider. This transaction represents a meaningful investment for us in the attractive U.S. insurance market and we believe our alternative asset strategies can deliver long-term value to the company. We look forward to supporting American Equity in advancing its AEL 2.0 strategy which is well-positioned to create value for all stakeholders.”

Anant Bhalla, President and Chief Executive Officer of American Equity, said: “This compelling strategic transaction, which we have been discussing with Brookfield since March, demonstrates the substantial shareholder value we are creating through execution of our AEL 2.0 strategy. By partnering with a world-class asset management and investment firm like Brookfield, we are accelerating the implementation of our strategy to be the leading, customer-focused annuity provider with best-in-class capabilities across the entire insurance value chain, from distribution to asset management. This partnership accelerates the transformation of our business toward a ROA model from our historical focus on ROE, unlocks significant new investment opportunities, and enables us to deliver significant value to our shareholders and policyholders.”