American Equity Executes Industry Re-defining Reinsurance Partnership with Brookfield Reinsurance
$10 billionof liabilities to be ceded which includes approximately $4 billionof “IncomeShield” in-force statutory reserves ceded as of July 1, 2021and up to $6 billionof future statutory reserves under a forward flow reinsurance arrangement on future sales of “IncomeShield” or other mutually agreed products.
Cash to be transferred upon closing of the in-force reinsurance transaction of
Capital to be released from the transfer of in-force liabilities in excess of
Flow reinsurance arrangement will provide
American Equity Lifecapital flexibility to fuel future growth in annuity origination as represents approximately a quarter of current new FIA annual sales.
- Transformation from an investment spread earning insurer into ceding liabilities for a profit by generating stable, recurring “fee-like” cash income.
- American Equity will be entitled to receive ALM fees and ceding commissions that will provide stable, predictable, repeating earnings for 6-7 years.
American Equity continues to execute its strategic transformation into a hybrid, diversified financial services firm with a balanced mix of both traditional insurance-like investment spread business backed by its own risk-bearing equity capital, coupled with growing its base of fee-like earnings by ceding liabilities to reinsurance vehicles with risk-bearing equity capital provided by third party, permanent capital partners. The latter is part of American Equity’s building out a return on assets (“ROA”) business model which is a capital-efficient way to fuel future growth.
For more details, see American Equity’s current report on Form 8-K released on the same day as this new release, available on American Equity’s website and at this link, which American Equity will submit to the
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
The forward-looking statements in this disclosure, such as to be, transformation, and will, are based on assumptions and expectations that involve risks and uncertainties, including the "Risk Factors" American Equity describes in its
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