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Aviva USA’s Fixed Annuity Business Sale Finalized

It’s been almost a year, but the deal to purchase Aviva USA’s annuity business is finally complete.  The Des Moines Register, which has an active interest in this story since the company is located in Iowa, offers up the details in “Apollo completes Aviva USA deal for $2.6 billion.”  Victor Epstein writes that the deal ended up costing Apollo Global Management $800,000 more than their original offer of $1.6 billion back in December of last year.  State insurance regulators spent a long time evaluating the sale of Aviva USA to private equity firm Apollo.  They will be incorporating Aviva USA’s annuity business into their Athene insurance unit and renaming it Athene USA.  While keeping the majority of the annuity business in tact, Apollo sold the life insurance business to Global Atlantic Financial Group.

Retirees and financial planners like the steady returns of annuities, which has kept them popular over the years.  Athene plans to strengthen their place in the retirement services market through their integration of Aviva USA’s annuity business into their corporation.  They say that they will continue to offer exceptional service as well as consistent results for annuity holders.  The company’s annuity sales have decreased since Aviva USA was on the market, but that isn’t really surprising.  While overall indexed annuity sales increased 5.5% since the same time last year, Aviva USA’s indexed annuity sales went down 55%.  Unfortunately for the Des Moines area, employment at the facility has also decreased since Apollo took over the annuity company.  Iowa’s Insurance Commissioner says that he is sympathetic to those who have lost their jobs, but stresses that Apollo plans to keep their new annuity business in Des Moines.

Athene will now be one of the biggest fixed annuity companies in the United States after gaining the fixed annuity business of Aviva USA.  They now have $60 billion in assets and plan to expand their annuity business by more acquisitions in the future.  Athene’s parent company, Apollo, is increasing its assets under management more than threefold by this purchase.  Apollo will provide asset allocation and investment management services for the new Aviva USA business just as it does for Athene’s other annuity business.  Now that the sale has been finalized, we’ll have to continue watching to find out how Athene’s acquisition of Aviva USA’s annuity business changes the overall annuity landscape.  The large decline in indexed annuity sales was likely due to uncertainty related to the business sale, so the future sales will be a better indicator of the impact of this annuity sale.

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