A.M. Best Comments on Athene Holding Ltd. Acquisition of Aviva Life and Annuity Company
December 24, 2012 by N/A
Best’s News Service – December 21, 2012 03:19 PM
OLDWICK, N.J. – A.M. Best Co. has commented that the financial strength ratings of B++ (Good) and issuer credit ratings of “bbb+” of Athene Annuity & Life Assurance Company (Athene Annuity) (Greenville, SC) are unchanged following Athene Holding Ltd.’s (Athene) (Bermuda) Dec. 21, 2012, announcement that it had reached a definitive agreement with to acquire Aviva Life and Annuity Company (ALAC) (West Des Moines, IA) and its wholly owned subsidiary, Aviva Life and Annuity Company of New York (ALACNY) (Melville, NY) (together referred to as Aviva USA) for $1.55 billion. ALAC and ALACNY are currently the principal insurance subsidiaries of Aviva USA Corporation, which is an indirect, wholly owned subsidiary of Aviva plc (Aviva).
The transaction will add significant scale to Athene’s current annuity platform and place it among the top annuity writers in the United States. The company recently received a $621 million capital infusion from its parent in anticipation of this transaction. In commenting on the ratings, A.M. Best expects that the insurance operating companies of Athene Holding Ltd. will maintain favorable risk-adjusted capital ratios, and so the transaction would not have a significant impact on its financial strength.
While the acquisition of Aviva USA is consistent with Athene’s growth strategy, the acquisition is very large and with it comes the challenges of integration and branding. The impact of Aviva USA’s operating results and risk-based capital requirements on the group will be closely monitored, as will the ultimate structure of the transaction. If the transaction is deemed to impact the financial flexibility of the insurance operating group, then negative rating pressure may occur.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at http://www.ambest.com/ratings/methodology.
BN-NJ-12-21-2012 1519 ET #