As life insurance is arguably an important wealth management tool in the US, this transaction is an example of a private equity business pushing into the space.

KKR & Co, the giant US investments house, has bought outstanding shares of retirement and life insurance group Global Atlantic, a US business with more than two million customers.

The deal will involve KKR paying Global Atlantic shareholders the equivalent of one times the firm’s book value on the closing date, subject to an equity roll-over for certain existing shareholders. As of March 31, Global Atlantic’s book value was about $4.4 billion.

As life insurance is an important wealth management tool in the US, this transaction is an example of a private equity business pushing into the space. Another private equity big hitter which has made such moves is Warburg Pincus.

Once the deal is completed KKR said that Global Atlantic will continue to operate as a separate business with its existing brands and management team.

Global Atlantic offers annuities for individuals through banks, broker-dealers, and insurance agencies as well as life insurance for individuals and corporates. It also provides customized reinsurance solutions to its life and annuity company clients.

“This is a transformative event for KKR,” Henry Kravis and George Roberts, co-chairmen and co-chief executives of KKR said.

KKR said it liked the firm’s management team and results, such as adjusted operating earnings growth of 17 per cent annually from 2016 to 2019.

“The global insurance industry, with over $30 trillion of assets, is a key strategic focus for KKR. The acquisition of Global Atlantic represents a significant and natural extension of KKR’s existing insurance business, which includes managing $26 billion of assets on behalf of insurance companies across our strategies and products,” KKR said. Based on figures from March 31, KKR’s assets under management will rise from $207 billion to $279 billion. 

In the first year after the deal is concluded, KKR said the transaction will be accretive to its shareholders on a number of measures.

Global Atlantic will continue to be run by its senior leadership team led by Allan Levine, Global Atlantic’s chairman and CEO.

The transaction, which is expected to close in early 2021, is subject to required regulatory approvals and certain other customary closing conditions.

KKR was advised by Simpson Thacher & Bartlett LLP and Willkie Farr & Gallagher LLP. Debevoise & Plimpton LLP acted as legal advisor to Global Atlantic.