Public hearing Wednesday on Aviva USA acquisition
July 16, 2013 by Victor Epstein
The 1,400 families in the Des Moines-area that depend on an Aviva USA paycheck will have a chance to speak up Wednesday as Apollo Global Management’s insurance arm prepares to consummate its $1.8 billion proposed acquisition of the local employer.
Apollo, a New York-based financial firm with both hedge fund and private equity fund operations, will present its case publicly for the first time in front of Iowa Insurance Commissioner Nick Gerhart. It hopes to wed its Athene insurance business with West Des Moines-based Aviva USA and is seeking the state’s blessing as is required under state law.
The 10 a.m. hearing at 330 Maple Street in Des Moines is open to the public and any member of the audience may address a question to the Athene officers. It’s expected to last at least two hours.
“Anyone who signs in at the outset of the hearing as a person who is wishing to make comments or ask questions will be given an opportunity to do so,” said Iowa Insurance Division spokesman Tom Alger.
Wall Street firms with hedge fund and private equity fund operations have been snapping up distressed insurance assets on the cheap in recent years, raising concerns among insurance regulators that their aggressive investing habits will put policy-holders and their fellow insurers at risk. Another West Des Moines-based insurer, FBL Financial Group, sold its EquiTrust Life Insurance Co. annuities business to a Wall Street-based private equity fund called Guggenheim Partners LLC in January for $471 million.
Aviva USA had operating earnings of $311 million last year and is a leading issuer of fixed indexed annuities, a financial vehicle that pays a steady stream of money to policyholders after an initial period of investment. The company is a major economic engine in the Des Moines region, where its workers have helped spur residential and commercial development.
Aviva USA has been in limbo since May of last year when it was placed on the auction block by Aviva Plc – its London-based parent company. Apollo won a three-way bidding war for it on Dec. 21, versus Guggenheim and hedge-fund maven Philip Falcone’s Harbinger Group.
Gerhart is required to approve the deal unless the evidence presented at the hearing proves it will lessen competition in the Iowa insurance industry, the acquirer lacks the financial resources to maintain Aviva USA’s financial stability, its managers are incompetent, or the sale will jeopardize the interests of the public and Aviva policyholders.
Athene is far smaller than Aviva USA, with only 275 employees to the latter’s 1,800. It plans to adopt the name Athene USA after the deal is approved and move its operational headquarters to West Des Moines from Greenville, S.C., in what chief executive officer Jim Belardi has described as a “big commitment” to the area. Athene is legally headquartered in Bermuda for tax purposes.
Athene indicated in its 1,403 page Form A filing with the Iowa Insurance Department that it would not be retaining Aviva USA CEO Chris Littlefield on its management team.
“We’re ready,” Belardi said. “We will have a presentation that Grant Kvalheim, my president, will read into the record, that essentially summarizes in a lot of respects our Form A filing. Beyond that I’m not sure what to expect.”
