Apollo, Crestview, Reverence to invest combined $240 mln in Venerable

Apollo Global Management is leading an investor group to buy the annuities business of Voya Financial Inc.

Voya Financial said Dec. 21 it was selling nearly all of its closed-block variable annuity segment to an investor group. The buyers include private equity firms Apollo, Crestview Partners and Reverence Capital Partners, as well as Athene Holding. The sale is expected to close in Q2 or Q3.

Voya, a provider of retirement products and services, said the sale will produce about $1.1 billion in value. This includes more than $500 million of immediately deployable capital, Voya executives said Thursday on a conference call announcing the sale.

Voya Financial will be exiting the individual annuities business. The company said it will be conducting a strategic review of its individual life business during the first half.

The investor group formed Venerable Holdings to buy the Voya assets. The PE firms will have equal stakes in Venerable, while Athene and Voya will each own a minority, the firms said in a separate release. Venerable will stay in CBVA’s current headquarters in West Chester, Pennsylvania, while senior management, including Patrick Lusk, David Wiland, and Timothy Brown, will remain in place.

“We believe blocks such as the CBVA business are best owned through private ownership,” the PE firms said in the joint release. “In addition, we believe success in variable annuities is primarily calibrated with effective risk management, which is Venerable’s most significant core competency.”

The investors are providing $500 million of contributed capital, according to a slide presentation from Athene’s conference call Thursday. Apollo, Reverence and Crestview are each investing $80 million, the slide said, indicating that each firm will have about 23 percent of Venerable. (Apollo’s investment is coming from its balance sheet so Venerable will not be considered a portfolio company, a source said.)

Voya is providing $35 million for 9.9 percent. Athene is investing $75 million, plus $150 million debt, which works out to a stake of 21 percent.

Apollo has a history in life insurance. The buyout shop teamed up with James Belardi, a form AIG executive, to acquire annuities businesses after the financial crisis, the Wall Street Journal reported. Belardi founded Athene Holdings, of Bermuda, in 2009. Apollo was an investor of the retirement services company when it went public at the end of 2016. As of April 2017, Apollo still owned nearly 45 percent of Athene but has since sold down its stake and doesn’t appear to own any stock, according to regulatory filings.

Crestview is a noted financial services investor. Investments include Fidelis Insurance Holdings Ltd, Victory Capital and FBR & Co.

Reverence, a financial services-focused firm, has invested in Victory Capital ManagementKabbage and Russell Investments.

Goldman Sachs provided financial advice to Voya, while Willkie Farr & Gallagher served as legal counsel. Barclays advised Venerable and Athene, while Sidley Austin acted as their attorney.

Apollo declined comment. Crestview could not be reached for comment.

Action Item: Contact Athene CEO James Belardi at +1 441-279-8400

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