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Athene (ATH) Inks a Deal to Purchase Foundation Home Loans

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Athene Holding Ltd.’s ATH has agreed to acquire Foundation Home Loans (“FHL”). The transaction is subject to regulatory conditions including the consent of Financial Conduct Authority.

Berkshire-based FHL is a specialist mortgage lender. It provides an array of Buy to Let mortgages as well as Residential mortgages. FHL had £3 billion of buy-to-let and owner-occupied mortgages on its books as of June 2021.

The deal will be administered by Athene’s strategic asset management partner Apollo Global Management, Inc. APO. Athene and Apollo have been in a partnership since 2009, under which Apollo currently holds 34% stake in Athene. Recently, Athene inked a deal to merge with Apollo Global Management in an $11 billion all-stock deal, expected to be completed in January 2022.

The investment in FHL will enable both Apollo and Athene to leverage the expertise of FHL in originating high-quality residential mortgage loans. The deal will offer Athene better investment opportunities in high-quality yield assets.

The agreement will enable Athene and Apollo to add direct origination asset sourcing capabilities to Athene’s alpha-generating investment portfolio. Also, the transaction is expected to provide high-quality assets to residential mortgage portfolio of loans and structured securities of Athene.

Athene boasts an impressive inorganic growth, driven by several buyouts and block reinsurance transactions with several companies. Recently, Athene along with Apollo Global has agreed to purchased 15% stake in Challenger Limited. This marks Athene’s entry in the Australian market. The acquisitions of Liberty Life Insurance Corporation, Investors Insurance Corporation, Presidential Life Corporation, Aviva USA Delta Lloyd Deutschland AG (DLD) have aided Athene to improve product offerings and add to the scalability of its business as well.

The company expects that its inorganic growth channel will continue to be an important driver in the long term. The company has also undertaken a number of block reinsurance transactions, which involve teaming up with life and annuity companies for selling off their non-performing businesses or limiting their exposure to certain products. Being a well-capitalized reinsurer, we believe that such deals reflect Athene’s deep expertise in the retirement services industry.

As far as FHL is concerned, the transaction with Athene will expand and fortify its presence in the UK buy-to-let market.

Shares of Athene have rallied 94.5% in the past year compared with the industry’s 10.6% growth. Persistent focus on organic and inorganic channels, strategic relationship with Apollo, along with effective capital deployment measures should help it maintain the momentum. Athene currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Other Acquisitions in the Insurance Sector

There have been a host of onsolidationsc in the insurance space of late, given its significant capital availability. Horace Mann Educators Corporation HMN has agreed to buy Madison National Life Insurance Company to boost its presence in the education market. State Auto Financial Corporation STFC agreed to merge with Liberty Mutual Holding Company


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Apollo Global Management, Inc. (APO) : Free Stock Analysis Report

State Auto Financial Corporation (STFC) : Free Stock Analysis Report

Athene Holding Ltd. (ATH) : Free Stock Analysis Report

Horace Mann Educators Corporation (HMN) : Free Stock Analysis Report

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