Brookfield quits insurance board amid controversy over Josh Harris’ firm
A major financial backer of billionaire Josh Harris’ new asset management venture has received a rare public rebuke from Brookfield Asset Management, which alleged that AEL, the life insurance company, should not be putting funds into a startup.
Shares of the Iowa-based annuity dealer fell 21 percent after Brookfield, its largest shareholder, expressed displeasure with an investment in a Harris vehicle. start up after leaving Apollo Global Management earlier this year in a succession dispute.
Announcing his resignation from the AEL board, of Brookfield Chief Investment Officer Sachin Shah wrote: “It is clear that there has been a fundamental shift in strategic direction based on recent events. [AEL]”.
“As previously reported, neither I nor Brookfield Reinsurance can support this change in strategy because it is in the best interest of the company, its policyholders or its shareholders,” Shah added in a letter filed on Tuesday.
Brookfield executives opposed AEL, whose full name is American Equity Investment Life Holding Company, using resources to back Harris’ 26North Partners, which they consider a new and unproven investment firm, a person familiar with the matter said.
In a statement to the Financial Times, AEL rejected those criticisms, saying the investment in 26North was “similar to our deals with a number of other value-creating asset managers” and “consistent with our own”. . . We announced the strategy for the first time in October 2020″.
“We are also disappointed with Brookfield’s decision not to appoint a new CEO immediately,” the company added.
AEL CEO Anant Bhalla announced a “modest” investment in 26North on an earnings call on Tuesday, calling Harris, the co-founder of Apollo, “one of the leading private equity investors of his generation.”
“AEL expects to acquire future assets . . . 26 North,” he said.[It has] a lot of talent gathers there.”
Brookfield took a stake in AEL for the first time in 2020, shortly after the insurer rejected an unsolicited takeover bid for Apollo’s annuities affiliate Athene Holding. The Canadian group also created a reinsurance affiliate initially to handle $5 billion of the Iowa company’s annuity liabilities and now owns 18 percent of the insurer.
In recent years AEL has been investing more aggressively in private assets at a time when alternative investment managers such as Apollo, Blackstone, KKR and Carlyle have been. join forces with insurance companies as a way to build their credit investment units.
AEL disclosed on Monday that 18 percent of its investment portfolio is deployed in “higher-yielding privately sourced assets.” Before Tuesday’s decline, the company’s shares were up nearly a tenth for the year.
Brookfield said it was also asserting a contractual right to force the insurer to submit paperwork that would allow it to sell nearly 60 percent of AEL shares to the Canadian group.
Harris stepped down from the Apollo board earlier this year after a 30-year career with the group. He was in the running to replace Leon Black as CEO last year, but it fell to Marc Rowan, the architect of the company’s insurance operations.
Representatives for 26North, Harris and Brookfield declined to comment.
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