American National agrees to $5B purchase offer

Last edited 5:50 p.m., Aug. 16, 2021

Canadian company Brookfield Asset Management Reinsurance Partners Ltd. (NYSE: BAMR) penned a deal to purchase American National Group Inc. (Nasdaq: ANAT).

The Aug. 9 announced deal for Galveston, Texas-based American National, which has an operational hub in Springfield, is valued at $5.1 billion, according to a news release. Brookfield, which operates its headquarters in Toronto, intends to maintain the Springfield office at 1949 E. Sunshine St., dubbed American National Center. 

“Brookfield Reinsurance has been very clear: They want us to continue to grow our business, together with our leadership team and our excellent team of employees and distribution partners,” American National President and CEO Jim Pozzi said in the release. 

The purchase is expected to close in the first half of 2022. American National shareholders will receive $190 per share in cash when the deal closes, according to the release.

The company ranked No. 22 on Springfield Business Journal’s list of the area’s largest employers, published July 19. American National reported 901 local employees led by Bernard Gerwel, senior vice president and chief innovation officer, and Shannon Smith, executive vice president and chief agencies officer.

Gerwel released a statement to SBJ about the purchase but declined an interview. Attempts to reach Smith were unsuccessful.

“We are excited about Brookfield Reinsurance choosing American National as a platform to fulfill their vision to expand their insurance business into the United States,” Gerwel said in the statement. “This is an energizing moment in our company’s history.”

The companies emphasized in the news release Brookfield would maintain American National’s headquarters in Galveston as well as its other two hubs in League City, Texas, and Albany, New York.

American National, which carries life, auto, renters and other kinds of insurance, was founded in 1905, according to the release. The company had $30.4 billion in assets, $23.6 billion in liabilities and $6.8 billion in stockholders’ equity as of June 30, according to its latest earnings report.

It reported companywide revenue of $3.8 billion in 2020, a 7% drop from the year prior.

According to its website, five American National insurance agents cover the Springfield area. However, they all were mum on reactions to the deal and referred questions to company spokesperson Deborah Janson.

American National reportedly began exploring a possible sale in May, according to media reports, although officials remained quiet at the time about the publicly traded company’s future.

Brookfield’s acquisition of American National is an expansion of its U.S. operations and of its recent entry into the insurance industry.

“American National is a well-established, well-capitalized U.S. insurance holding company that will provide a sizable platform from which Brookfield can grow,” Brookfield spokesperson Kerrie McHugh said via email.

Brookfield Reinsurance launched in late June as a unit of Brookfield Asset Management. That followed the company’s November 2020 announcement to create the business, according to separate news releases.

Brookfield Asset Management was founded in 1899 as the São Paulo Tramway, Light and Power Co. The company has over $600 billion of assets under management and owns and operates real estate, infrastructure, renewable power, private equity and credit companies in more than 30 countries worldwide, according to its website.

In Brookfield Reinsurance’s initial quarterly report released Aug. 12, it reported $1.25 billion in equity and $1.1 billion in excess capital.

In November, Brookfield closed on a $337 million investment with another insurance company, West Des Moines, Iowa-based American Equity Investment Life Holding Co. (NYSE: AEL). In the deal, Brookfield received roughly 9.9% equity interest in American Equity and Brookfield Managing Partner and Chief Investment Officer Sachin Shah joined the insurance company’s board of directors, according to a news release. Shah also is CEO of Brookfield Reinsurance.

Brookfield’s moves in the insurance industry fall in line with national trends, according to global accounting and consulting firm Deloitte. The firm reported insurance industry mergers and acquisitions were up 8% year over year in 2020, and another increase is predicted this year.

Bruce Flatt, CEO of Brookfield Asset Management, told investors in September 2020 that the company had previously been slow to expand into insurance largely because it believed interest rates were coming down.

“We think now, with interest rates at zero, the time is right for us to consider expanding the small insurance operations we have,” he said, according to a transcript of the discussion with investors. “Over time, we think this could be a $100 to $200 billion business for us.”

ANAT shares increased roughly 8.8% on Aug. 9, closing at $188. Its stock price closed Aug. 11 at $192.51, just shy of its 52-week high of $192.90. Shares in BAM closed Aug. 11 at $57.38, less than 1% off its 52-week high of $57.83.