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Athene plans offering of preference shares

Capital raise: Jim Belardi, CEO of Athene, which plans an offering of preference shares

Bermudian life reinsurer Athene Holding Ltd is planning an offering of preference shares.

The company has not yet specified how much capital it plans to raise, nor the coupon on the shares — each will depend on market demand — and it described the offering as “opportunistic”.

Athene filed a preliminary prospectus with US regulator the Securities and Exchange Commission yesterday.

The company intends to use the proceeds of a preferred stock offering to support a portion of its funding commitment to Athene Co-Invest Reinsurance Affiliate, which is expected to provide up to $4 billion of third-party capital to support Athene’s business objectives.

Athene was incorporated in Bermuda ten years ago. The main thrust of its business is to buy blocks of annuity contracts, which guarantee policyholders an income for life in exchange for a lump sum.

Athene invests assets tied to these contracts with the aim of generating a greater return than is necessary to meet payments to annuity holders.

The company said its board of directors has specifically authorised a contingent increase in the company’s share repurchase capacity to offset any near-term earnings dilution associated with a preferred stock issuance.

This authorisation increase for additional repurchases of common stock is estimated to be approximately 15 per cent of the offering proceeds.

“Launching a preferred stock offering is consistent with our flexible approach towards managing shareholder capital and opportunistically funding our operations with the most efficient capital available to us,” Jim Belardi, chief executive officer of Athene, said. “We believe a preferred stock security will diversify our capital structure, receive favourable equity treatment from rating agencies, and preserve substantially all of our untapped debt capacity.”

Since December 2018, Athene has opportunistically acquired 7.8 million shares of common stock for $325 million at an average price of $41.49 per share.

More than half of that activity has occurred during the past month, Athene said, during which Athene spent $178 million on 4.2 million shares of its common stock in the open market.

“We are pleased with our share repurchase execution to date and believe it remains a highly accretive capital deployment opportunity to drive shareholder value,” Mr Belardi said.

“We have a strong track record of delivering mid-to-high teens returns on equity, resulting in 17 per cent compound annual growth in adjusted book value per share over the past ten years.

Athene had total assets of $132.9 billion as of March 31, 2019.