Prudential announces $27.6bn US reinsurance agreement alongside $500m equity investment by Athene Holding into US business

Written by Adam Cadle

18/06/2020

Prudential has reached agreement with Athene, a leading retirement services company, for its subsidiary Athene Life Re to invest $500m in Prudential’s US business in return for an 11.1% economic interest for which the voting interest is 9.9%.

Athene’s investment will be deployed in Jackson, strengthening its capital base.

Athene Life Re has also fully reinsured a $27.6bn in-force portfolio of Jackson’s US fixed and fixed indexed annuity liabilities under a long-term arrangement.

Athene’s investment will take the form of a cash subscription for the issuance of new common equity in Brooke (Holdco 1) Inc, the holding company containing Prudential’s US businesses. These include Jackson National Life Insurance Company, a top-two annuity provider with best-in-class products, distribution and operations headquartered in Lansing, Michigan, and PPM America Inc, an asset manager headquartered in Chicago, Illinois.

The combined effects of the investment and reinsurance transactions are expected to increase Jackson’s risk-based capital cover ratio by approximately 80 percentage points.

Prudential continues to prepare for a minority IPO of Jackson alongside the active evaluation of other options to create an independent US business. A further update will be provided at Prudential’s half-year results in August. After the transaction, Prudential’s US business will have an anchor investor of Athene’s standing bringing a long-term commitment to Jackson and its development, while Prudential will retain full strategic flexibility in relation to the business.

Related Articles