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Just a ‘Heads Up’ on American Equity Investment

This is just a note for those that don’t read my ‘headlines of interest’–more particular headlines last night.

Annuity provider American Equity Investment (AEL) rejected an unsolicited buy out offer from Elliot Management. The article is here. I don’t know Elliot Management, but I don’t trust any of them to have MY interest in mine (I have no investment in these–but I have pondered it).

My only point in highlighting this is because ‘where there is smoke there may be fire’.

AEL has 2 issues of fixed to floating rate perpetual preferreds outstanding which are here.


11 thoughts on “Just a ‘Heads Up’ on American Equity Investment”

  1. Isn’t this the insurance company that sells safe and stable annuities to retirees and that now wants to be a hedge fund? “At American Equity, we strive to provide stable annuity products backed by our company’s financial strength, disciplined investment practices and award-winning customer service.” – their website

    Here’s a Bloomberg headline that didn’t make it to The Other Website’s newsfeed:
    “American Equity Sinks as Josh Harris Deal Spurs Brookfield Clash”

    “Neither I nor Brookfield Reinsurance can support this change in strategy as being in the best interests of the company, its policyholders or its shareholders,” Shah said in the letter, a copy of which was filed with regulators. …. Brookfield Asset Management is American Equity’s largest shareholder, with an 18.5% stake.”

    Looking at what AEL is apparently trying to become, I am guessing AEL could ultimately have a binary outcome: either they win big or they lose big. I can’t comment on the common, but I’ve scratched AEL off my personal annuity search list. Zero upside to policyholders and a large downside. Just my opinion.

    1. BJ,
      I have a small retirement from when I worked at GP later the division was sold to Bluelinx run by a private equity company then finally went public again full circle. I was just informed they are converting the fund to a annuity with a insurance company whose name escapes me at the moment, said the change over will take about a year.
      These comments as not giving me a lot of confidence in the outcome

  2. HDO was recommending AEL-B a week or two ago. I had a brief back-and-forth with Pendragon about the likelihood of this being called at first opportunity, but he stood his ground and I moved on.

    1. Gum, never discuss anything with someone who thought B rated debt was “high quality” or who recommended a true bond in his own article and didnt know purchaser pays accrued interest up front….Just insult and ridicule. Now I suspect he might have a high specialization knowledge about high caloric fatty snacks though.

      1. We have called Pendy many names. In the end, he doesnt care what you call him as long as you call him to the supper table.

  3. Thanks for the heads-up. Sold the remainder of my AEL/PRA. Good profit. The reset rate would have been around 8% in 2 years. No way, is private equity going to pay this rate. Takeover, may never happen but I am not going to take the risk.

    I booked the profits and moving on.

    1. Gary–yes I posted at 5 pm last night, but just want to make sure everyone is well informed. Thanks for you comments.

        1. Mine are all gone, too. Sold at cost, and made 2 years of dividends/interest. Better than losing mula.

      1. Thanks for the heads up tim. I just sold for a $2.00 a share profit thanks to you. I don’t comment much as I couldn’t even come close to being on the level of you and the others here. Thanks to all!

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