American Equity provides annuities and other insurance products. Credit: kalhh from Pixabay.

Insurance firm American Equity Investment Life has spurned Prosperity Life Group’s unsolicited takeover proposal. 

Prosperity Life along with its principal shareholder, Elliott Investment Management offered to acquire Iowa-based American Equity in an all-cash deal, at $45 a share.

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Initially, Prosperity Life sent a proposal on 8 December 2022, which was rejected by American Equity on 12 December 2022. 

Prosperity Life sent a follow-up letter on 19 December 2022, reiterating the same price and terms. 

The American Equity board dismissed the second proposal, stating that it “significantly undervalues” the firm and its value-creation potential. 

According to Bloomberg, American Equity gained 7% to settle at $43.12 on 20 December 2022, giving the business a valuation of nearly $3.7bn.

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American Equity chair David Mulcahy said: “The board is fully committed to acting in the best interests of AEL and its shareholders and policyholders. 

“Consistent with its fiduciary obligations and in consultation with independent financial and legal advisors, the board has carefully evaluated Prosperity and Elliott’s opportunistic proposal and unanimously determined that it significantly undervalues the Company.”

As per the report, Massachusetts Mutual Life Insurance and Athene Holding made a buyout offer for American Equity more than two years ago.

The company, which provides annuities and other insurance products, avoided that deal by selling a stake to Brookfield Asset Management.

Since then, Brookfield continues to be American Equity’s largest shareholder.

Brookfield and the business have been at odds recently over investment choices and strategic direction, leading analysts to believe that American Equity could be up for sale, the report added.