Iowa Awards Conditional Approval of Aviva Sale to Athene
August 19, 2013 by Thomas Harman
DES MOINES, Iowa – The Iowa Insurance Division has conditionally approved the purchase of Aviva Life and Annuity Co. and its subsidiaries by Apollo Global Management and its affiliate Athene Holding Ltd., paving the way for the deal to close later this year.
U.K.-based Aviva plc in December agreed to sell Aviva USA Corp. to Athene Holding for $1.8 billion (Best’s News Service, Dec. 21, 2012). IID spokesman Tom Alger said Aviva USA will become the on-shore holding company for Athene’s U.S. companies.
The deal had to be approved in Iowa, because Aviva Life has offices in the state. Apollo’s agreement in Iowa comes on the heels of its agreement with New York state insurance officials to provide policyholder protections in order to gain approval of Athene’s buy of Aviva Life and Annuity (Best’s News Service, Aug. 15, 2013).
Officials at Aviva’s offices in London issued a short statement. “This is another important step in the sale process. We maintain guidance that we aim to complete the transaction by the end of the year,” the company said.
The conditions said Aviva Life will pay no ordinary or extraordinary dividends or distributions to shareholders for five years, unless the commissioner approves them. Aviva Life must have any revisions to operations and financial projections approved by the commissioner. Aviva Life must also gain commissioner approval of all affiliated agreements and investments that are subject to the state’s holding company law, even if the surplus percentage is below the current reporting threshold.
Also, all non-variable deferred annuities containing guaranteed minimum death benefits or withdrawal benefits issued by Aviva Life beginning Jan. 1, 2014 must meet reserving standards set in Actuarial Guideline 33. The IID said in a statement it will reject any application for the use of Actuarial Guideline 43 for non-variable deferred annuities containing guaranteed death benefits or withdrawal benefits. The IID will continue using the more traditional Actuarial Guideline 33 for such companies.
The conditions set by the IID are in addition to the enhanced reserving measures voluntarily offered by Athene as part of its filing. Athene will increase its policy reserves by $150 million and will take part in a capital management agreement for capital and surplus requirements as approved by the commissioner. “Taken together, the voluntary increased reserving and the conditions described by the commissioner enhance greater scrutiny of consumer protection and long-term company viability,” the IID said in a statement.
Earlier, hospitality union Unite Here urged Gerhart to place restrictions similar to those under consideration by the National Association of Insurance Commissioners, including requiring the insurer to enter into a capital maintenance agreement to provide a minimum level of protection to policyholders (Best’s News Service, July 25, 2013).
Aviva Life and Annuity Co. currently has a Best’s Financial Strength Rating of A- (Excellent). Athene Annuity and Life Insurance Co. currently has a Best’s Financial Strength Rating of B++ (Good).
(By Thomas Harman, associate editor, BestWeek: Tom.Harman@ambest.com)
