Aquarian to Buy Brighthouse Financial for $3 Billion

The US-based Brighthouse Financial, a life insurer spun off from MetLife in 2017, is being acquired by Aquarian Holdings, an 8-year-old investment firm, which is seeking to raise over $3 billion to buy the insurer, with a final offer expected soon.

The acquisition, which could represent one of the largest insurance deals in recent years, is subject to final equity financing from Middle Eastern investors including from the UAE and Qatar.

Quoting Financial Times, a report from AI Investor said that despite initial investor enthusiasm, the sale process has been lukewarm due to the company’s eroding finances and challenges in honouring its 2 million life insurance and annuities contracts.

The report said that Aquarian is in late-stage discussions with Mubadala Capital and the Qatar Investment Authority (QIA) to raise over $3 billion in equity backing for the acquisition.

This funding is crucial for Aquarian to submit a final offer for Brighthouse as early as this week. The transaction, if completed, would significantly expand Aquarian’s asset base and position it as a major player in the insurance sector.

Brighthouse, which manages nearly $120 billion in assets, has faced challenges in improving profitability and achieving its targeted capital ratios. The company’s reliance on variable annuities, which are capital-intensive and costly to hedge, has contributed to earnings volatility and quarterly losses from accounting swings Brighthouse Financial Inc Registered Shares

Despite launching a sale process earlier this year with Goldman Sachs and Wells Fargo, Brighthouse attracted limited interest from potential buyers, leaving Aquarian as one of the few active suitors, AI Investor said.

Aquarian’s expansion strategy involves aligning insurance assets with private investments such as securitized debt, leveraged loans, and real estate. An acquisition of Brighthouse would exponentially expand its asset base and push it into the ranks of the largest private capital groups in the industry Brighthouse Financial surges 14% as Aquarian nears takeover funding.

Backing by Mubadala Capital

Aquarian is already backed by Mubadala Capital, which participated in a $1.5 billion fundraising round last year aimed at private credit, insurance, and real estate investments.

Brighthouse’s market position and struggles have led to a lukewarm reception among initial investors. The company’s ability to honour its 2 million life insurance and annuities contracts has been a point of concern.

However, Aquarian’s willingness to purchase Brighthouse at a significant premium to its current trading price indicates confidence in the company’s potential for growth under new management, the report said.

The acquisition, if successful, would represent a major strategic shift for both the insurer and its potential buyer. The transaction’s completion would depend on the final equity financing and the regulatory approvals required.

As of now, Brighthouse Financial’s shares have surged 14% in response to the news, reflecting investor optimism about the potential deal as Aquarian nears takeover funding.

In conclusion, the potential acquisition of Brighthouse Financial by Aquarian Holdings is a significant development in the insurance sector. The deal, if completed, would have far-reaching implications for both companies and the broader insurance market, AI Investor said.