Athene Holding Ltd.ATH has agreed to acquire the Home Loan Fund (FHL). The transaction is subject to regulatory conditions, including the consent of the Financial Conduct Authority.
Berkshire-based FHL specializes in mortgage lending. It provides a variety of home and purchase mortgages as well as home mortgages. As of June 2021, FHL had £ 3 billion of leased and owner-borrowed mortgages on its books.
The deal will be managed by Athene’s strategic asset management partner. Apollo Global Management, Inc. APO. Athena and Apollo have been in a partnership since 2009, under which Apollo currently owns 34% of Athene. Athene recently signed a merger agreement with Apollo Global Management as part of a $ 11 billion deal to be completed in January 2022.
The investment in FHL will enable Apollo and Athene to leverage FHL’s expertise in providing high quality residential mortgages. The deal will offer Athene the best investment opportunity in high quality earning assets.
The agreement will allow Athene and Apollo to add direct asset search capabilities to Athene’s alpha-generating investment portfolio. The deal is also expected to provide high quality assets to Athene’s residential mortgage portfolio and structured securities.
Athene boasts impressive inorganic growth driven by multiple buyback and blocking deals with multiple companies. Athene recently agreed with Apollo Global to acquire a 15% stake in Challenger Limited. This marks the entry of Athene into the Australian market. The acquisitions of Liberty Life Insurance Corporation, Investors Insurance Corporation, Presidential Life Corporation, Aviva USA Delta Lloyd Deutschland AG (DLD) helped Athene improve product offerings as well as increase the scalability of its business.
The company expects the inorganic growth channel to remain an important factor in the long term. The company has also entered into a series of block reinsurance deals that involve merging with life insurance and annuity companies to sell their dormant businesses or limit their exposure to certain products. As a well-capitalized reinsurance company, we believe such transactions reflect Athene’s deep experience in the retirement services industry.
As for FHL, the deal with Athene will expand and strengthen its presence in the UK buying and selling market.
Athene shares are up 94.5% over the past year, compared with the industry’s 10.6% gain. Continuous focus on organic and inorganic channels, a strategic relationship with Apollo, and effective capital allocation should help the company maintain momentum. Athena is currently rank 3 Sachsa (Hold). You can see the full list of today’s Zacks # 1 Rank (Strong Buy) stocks here.
Image source: Zacks Investment Research
Other acquisitions in the insurance sector
There have been many consolidations in the insurance industry lately, given the significant availability of capital. Horace Mann Educators Corporation HMN agreed to buy Madison National Life Insurance Company to increase its presence in the education market. State Automobile Finance Corporation STFC agreed to merge with Liberty Mutual Holding Company
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