Private Equity Firm in $4 billion US Life Deal

The growing attraction of the global insurance sector for investors has continued after private equity giant KKR announced it is to acquire life and pensions group, Global Atlantic Financial Group (Global Atlantic).

The deal will see KKR acquire all of the outstanding shares of Global Atlantic. Under the terms of the agreement, KKR will pay Global Atlantic shareholders an amount equal to 1.0x Global Atlantic’s Book Value as of the date of closing, subject to an equity roll-over for certain existing shareholders. As of 31 March 2020, Global Atlantic’s Book Value was approximately $4.4 billion. KKR expects to fund the acquisition, net of equity roll-over participation, from a combination of cash on hand, proceeds from potential minority co-investors and the issuance of new debt and/or equity by KKR.

The investment in Global Atlantic will be held on KKR’s balance sheet and through a proprietary vehicle established for others to invest alongside KKR’s balance sheet, not in any client funds.

The deal is expected to be completed early next year but KKR said Global Atlantic will continue to be run by its existing senior leadership team led by Allan Levine, Global Atlantic’s Chairman and Chief Executive Officer.

Global Atlantic has more than two million policyholders through its retirement and life insurance products. It is one of the largest fixed rate and fixed indexed annuity providers in the United States, offering annuities for individuals through a network of banks, broker-dealers, and insurance agencies as well as life insurance for individuals and corporates. Global Atlantic is also a leader in the institutional channel, providing customized reinsurance solutions to its life and annuity company clients.

KKR said the deal will deliver range if benefits to the firm and Global Atlantic’s customers.

It said it was acquiring a “Best-in-class business with a strong management team”. 

“The global insurance industry, with over $30 trillion of assets, is a key strategic focus for KKR,” it added. “The acquisition of Global Atlantic represents a significant and natural extension of KKR’s existing insurance business, which includes managing $26 billion of assets on behalf of insurance companies across our strategies and products.

Global Atlantic has a history of innovation and growth, including expanding through mergers and acquisitions – a track record that will be increasingly valuable in the rapidly consolidating life and annuity industry.”

“We are thrilled to have a new, long-term partner in KKR,” said Allan Levine, (pic) Chairman and Chief Executive Officer of Global Atlantic. “With its global presence, investment acumen and long-term focus, we believe we will be even better positioned – financially and strategically – both to help Americans address the financial challenges they face today and to help our institutional channel clients achieve their strategic, risk, and capital management goals.”

“This is a transformative event for KKR,” said Henry Kravis and George Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. “Global Atlantic is a best-in-class business with a like-minded entrepreneurial management team. Our businesses are complementary and our partnership will benefit all of our collective stakeholders.”

Joseph Bae and Scott Nuttall, Co-Presidents and Co-Chief Operating Officers of KKR, added: “This transaction is highly strategic for KKR — it meaningfully expands our base of permanent capital, further diversifies and scales our business, and significantly grows our position within the insurance industry, which has been increasing its exposure to alternative investment strategies. Insurance providers play a critical role in supporting the financial security for millions of individuals. This transaction positions KKR to support Global Atlantic policyholders through our global network and asset management and origination capabilities.”

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