Prudential has reached agreement with Athene Holding, a retirement services company, for its subsidiary Athene Life Re Ltd to invest $500m (£402m) in Prudential’s US business in return for an 11.1% economic interest.
Athene’s investment will be deployed in Jackson National, Prudential’s US annuities business, “strengthening its capital base”. Athene Life Re has also fully reinsured a $27.6bn (£22.2bn) 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.
Prudential said 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.
Mike Wells, group chief executive of Prudential, said: “We are delighted to be forging a new relationship with the team at Athene, given their deep expertise in the US annuity sector and long-term commitment to its development. This agreement is a key step forward in meeting our strategic objectives for Jackson.”
Jim Belardi, CEO of Athene, said: “We are very pleased to announce this mutually beneficial transaction in coordination with Jackson and its parent, Prudential plc.
“As top annuity providers focused on serving the US retirement marketplace, we are excited to bring these two leading franchises together through a large-scale reinsurance transaction that includes a new investment in Jackson by Athene.”