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Annuity reinsurer AEL Re licensed in Bermuda

An American issuer of fixed index annuities has set up a reinsurer in Bermuda.

American Equity Investment Life Holding Company revealed the formation and licensing of AEL Bermuda Reinsurance Company in its fourth quarter and full-year 2021 earnings release.

AEL Re Bermuda Ltd has been issued a Long Term Class C license by the Bermuda Monetary Authority.

American Equity said the formation and licensing of AEL Bermuda Reinsurance Company and transfer of $4 billion of in-force policies supported by approximately $300 million of capital on a Bermuda regulatory basis laid the foundation for future growth in reinsurance side car vehicles to drive "fee-like" return on assets (ROA) earnings.

The company said that, among other highlights, it had issued Tranche 2 shares thereby cementing a cornerstone partnership with Brookfield Reinsurance with all necessary approvals; year-end notional value under reinsurance agreements of $4.1 billion generating six to seven years of "fee-like" ROA earnings.

American Equity's president and CEO, Anant Bhalla, said: "I am proud of the successful execution in all three elements of the virtuous flywheel of our business strategy we have made over the last 12 months.

“We created two new reinsurance companies and successfully executed two new external reinsurance transactions including our industry redefining in-force and flow agreements with Brookfield Reinsurance that will generate ‘fee-like’ capital light earnings for six to seven years.

“In 2021, we allocated over $3.4 billion to privately sourced assets with expected returns of 5.1 to 5.2 per cent. Through refreshes of both American Equity Life's AssetShield and Eagle Life's Select Income Focus fixed index annuities (FIA) and the introduction of EstateShield, sales of long-tenor FIAs increased by 48 per cent for the full year.

“Over the next few years, we intend to further scale up the following three areas: allocation to private assets, total assets earning fees or investment spread, and bringing in third party capital through reinsurance to fuel growth.

“This should result in the realisation of the full potential of our business strategy and continue to grow shareholder returns by migration to the capital-light model we envision."

The company reported fourth-quarter net income available to common stockholders of $82.2 million, and full year net income available to common stockholders of $430.3 million.

The company reported book value per common share of $60.78 at December 31.

American Equity is headquartered in West Des Moines, Iowa with satellite offices slated to open in 2022 in Charlotte, NC, and New York City.

American Equity president and CEO Anant Bhalla

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Published February 21, 2022 at 7:44 am (Updated February 21, 2022 at 7:44 am)

Annuity reinsurer AEL Re licensed in Bermuda

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