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American Equity sale would shake up US index annuity market

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American Equity sale would shake up US index annuity market

A combination between American Equity Investment Life Holding Co. and Athene Holding Ltd. could lead to the creation of the largest U.S. underwriter of fixed-index annuities.

Reuters reported on May 22 that American Equity is exploring potential transactions, and sources reportedly told the news outlet that Athene, as well as FGL Holdings, were among the potential acquirers. American Equity a day later acknowledged that it is in preliminary discussions about a transaction, but said it could provide no guarantee that there would be an agreement.

The West Des Moines, Iowa-based company is an underwriter of life and annuity insurance products and is a major provider of index annuities. According to the Life Insurance and Market Research Association, or LIMRA, American Equity reported $3.97 billion of index annuities sales in 2017.

On a pro forma basis, the combined American Equity and Athene would have recorded $8.83 billion in sales in 2017, enough to top the market. A tie-up between American Equity and FGL would create the second-largest fixed-index annuities writer, based on 2017 sales.

The fixed annuity market is becoming a more popular option for U.S. consumers, as sales for such products have outpaced variable annuities since 2016. Fixed annuity sales totaled $108 billion in 2017, with $57.6 billion attributed to index annuities.

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Click here for a template for an annuity supplement market share template for groups and individual companies for life and health filers of the Exhibit - Analysis of Annuity Operations. The market share is based on net premiums and annuity considerations.