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American Equity Rejects Offer From Elliott Investment-Backed Insurer

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The American Equity Investment Life Holding Company board has rejected an unsolicited acquisition offer from Prosperity Group Holdings — a life insurer affiliated with Elliott Investment Management — for $45 per share in cash, or a total of $3.7 billion.

David Mulcahy, American Equity’s chair, called the Prosperity offer “opportunistic” and said it “significantly undervalues the company.”

Prosperity said that American Equity rejected one offer in less than three business days, and a second offer in less than 24 hours. I added that it might increase its offer if it can get more information about the company.

What It Means

Investment companies are still trying to acquire and realign life insurers. That could lead to more changes in the names of the companies standing behind your clients’ life insurance policies and annuity contracts.

The Companies

American Equity is a West Des Moines-based life insurer that’s best known for selling non-variable indexed annuities.

It has $60 billion in assets, relationships with 24,000 agents, and about 500,000 contracts in force.

Elliott Management, Prosperity’s principal shareholder, is the company that persuaded Principal Financial to drop its fixed annuity and retail life insurance operations in the United States.

Elliott Management acquired control over Prosperity, which is based in New York, in 2019. Prosperity acquired Shenandoah Life Insurance Company of Virginia in 2012. It later acquired SBLI USA Life Insurance Company and S.USA Life Insurance Company.

Prosperity-owned life insurers have about 300,000 policies in force.

The Deal

Prosperity reported Wednesday that it made its first offer for American Equity on Dec. 8 and the second offer Monday. American Equity said both offers gave the same price and economic terms.

Prosperity asserted that the second letter “indicated Prosperity’s willingness to improve its offer following due diligence.”

“We look forward to an opportunity to engage with the company in constructive dialogue,” Prosperity said.

(Image: Emilia Mariana Ungur/Shutterstock)


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