Even before its acquisition of Aviva USA is concluded, Athene Holding Ltd. has agreed to shed Aviva’s life insurance business through a reinsurance arrangement with Commonwealth Annuity and Life Insurance Co., a wholly owned subsidiary of Global Atlantic Financial Group.
As of the end of 2012, Des Moines, Iowa-based Aviva USA’s life insurance line held approximately $10 billion of statutory admitted assets, which included business written by Aviva Life and Annuity Co. and Aviva Life and Annuity Co. of New York.
Bermuda-based Athene is currently in the process of completing its acquisition of Aviva USA, which it agreed to buy late last year for $1.8 billion from parent company Aviva PLC. Shedding the life insurance business is in line with Athene’s focus on “becoming the leader in the fixed annuity segment of the retirement savings market,” said Athene CEO Jim Belardi in a statement. When the Aviva USA-Athene deal was announced, Athene stated that it was evaluating the sale of Aviva’s life operations.
According to LIMRA, Aviva was the third-largest seller of fixed annuities in the U.S. last year, coming in at $4.1 billion.
A spokesperson for Aviva USA said the announcement provides “a bit more clarity about the future of our business. We have a tremendous amount of integration activity ahead of us as we separate our life and annuity businesses. However, even as we move toward the close of the transaction, it is business as usual in taking care of our agents and consumers.”
In 2012, Aviva USA’s life unit sold $203 million of target life premium, an increase of 20 percent from 2011. Its operating profit for last year was $311 million.
Both sales – the acquisition of Aviva USA by Athene and the purchase of the life business by Commonwealth – are expected to close simultaneously later this year.
At the same time, Commonwealth’s parent, Global Atlantic Financial, has been shuffling its pieces as well. Yesterday, it announced it had finalized its break from the Goldman Sachs Group Inc., although Goldman Sachs will retain a minority state in the company.
In a statement, Global Atlantic stated it plans to establish a local team in Iowa and hire members of Aviva USA’s staff to manage the life insurance business.
All told, Aviva USA employs 1,800, with 1,400 in Des Moines.
Athene had roughly $14 billion of assets and $2 billion of equity capital as December 2012. Global Atlantic has $1.75 billion of equity and more than $15 billion of assets.