Brookfield Reinsurance and American Equity Investment Life Holding Company have entered into a definitive agreement whereby Brookfield will acquire all of the outstanding shares of common stock of AEL it does not already own in a cash-and-stock transaction that values AEL at approximately $4.3 billion.

As part of the agreement, each AEL shareholder will receive $55 per AEL share, consisting of $38.85 in cash and 0.49707 of a Brookfield Asset Management Ltd Class A limited voting share having a value equal to $16.15 based on the undisturbed 90-day volume-weighted average share price of the BAM shares on June 23, subject to adjustment in certain circumstances.

The merger consideration of $55 per share represents a 35 per cent premium to AEL’s undisturbed closing share price on June 23 and a 42 per cent premium to AEL’s 90-day VWAP as of such date.

In February, Argo Group International Holdings Ltd, the Bermudian-based specialty insurer, entered into a definitive merger agreement with Brookfield Reinsurance that will see the company acquire Argo in an all-cash transaction valued at approximately $1.1 billion. The merger is expected to close in the second half of 2023.

Sachin Shah, chief executive of Brookfield Reinsurance, said: “This transaction represents an important step in the continued growth of our insurance business, further diversifying, and scaling, our insurance capabilities, and is a direct result of the partnership we have developed with AEL since our initial investment in 2020.

“With this transaction, we have now deployed or committed over $10 billion of capital since our inception, bringing our total insurance assets to over $100 billion, and we remain on track with our growth targets for the business. Brookfield Reinsurance remains well capitalised and committed to meeting the needs of its policyholders and clients.”

Jon Bayer, managing partner, Brookfield Reinsurance, said: “Given the complementary nature of AEL’s leading fixed-annuity business to our existing platform, we expect to accelerate growth in collaboration with our distribution partners and employees while continuing to meet the needs of our policyholders and other stakeholders.

“Under its current leadership, AEL has been transformed into an innovative, asset-light insurer that is positioned for growth, and we look forward to building on our successful partnership.”

Following closing, Brookfield Reinsurance expects to maintain AEL’s headquarters in Des Moines, Iowa.

Brookfield Reinsurance also intends to continue AEL’s focus on alternative asset strategies and expects BAM will manage a significant portion of AEL’s assets.

The transaction is not subject to any financing condition or contingency. Each of Brookfield Reinsurance’s and AEL’s board of directors unanimously approved the merger agreement.

The merger is expected to close in the first half of 2024, subject to approval by AEL shareholders and other closing conditions customary for a transaction of this type, including receipt of insurance regulatory approvals in relevant jurisdictions and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.