CEO says up to 50 jobs could be lost at Aviva Investors
April 10, 2013 by Victor Epstein
Jim Belardi, chief executive officer of Athene Holding Limited, says that its planned acquisition of Aviva USA could lead to the loss of as many as 50 jobs at Aviva Investors after the deal is consummated in the third quarter.
Belardi said Aviva Investors has more than 140 people and Athene is keeping 90 to 100 of them. Aviva Investors, which is housed in downtown Des Moines, manages investments for Aviva USA, which has more than $56 billion of assets and about 1,800 employees – 1,400 of them in the Des Moines area.
Athene announced its intention to purchase West Des Moines-based Aviva USA from London-based Aviva Plc. in December for $1.8 billion. The holding company plans to combine Aviva USA’s annuities business with its own smaller annuities operation and rename the combined entity “Athene USA.” It’s not keeping Aviva’s life insurance business and is only keeping a portion of the team at Aviva Investors.
“We’re going to keep the entire private placement team (at Aviva Investors), virtually the entire commercial loan team, and some of the asset-backed securities people,” Belardi said. “One area we have not made decisions on is the I.T. people, and at one point there were 69 I.T. people there.”
Belardi said Athene also plans to keep Aviva Investors’ risk management, private placement and asset management operations team. He said he can’t be exact on the I.T. cuts until a deal is reached with one of the bidders for the Aviva USA life insurance business, which Athene is shopping. The new owner may want to keep some or all of them on board.
Athene, which now operates out of Greenville, S.C., has its own I.T. staffers.
“It’s always been the plan to be in the annuity business and not in the life insurance business,” he said. “We’re optimistic about getting a very good buyer for the life business, who wants to do the right thing on growing that business.”
Athene is the insurance arm of New York financier Leon Black’s Apollo Global Management private equity empire. It will be the No. 2 issuer of indexed annuities in the U.S. after the deal is complete, but is far smaller than the company it’s acquiring with about 275 employees and $11 billion in assets.
Annuities are designed to return a regular stream of income to policyholders after a period of initial investment and are often used in retirement planning. There are three main types: fixed, indexed and variable.
Fixed annuities are stable insurance contracts in which the policy-holder receives a fixed amount of dollar payments over a fixed time period. Indexed annuities are insurance contracts in which yields vary with a specific stock market index. They offer a guaranteed minimum return to insulate the policy-holder from catastrophic declines in the index. Variable annuities are insurance contracts in which the payments vary with the performance of the insurer’s investments. Fixed and indexed annuity issuers predominate in the Des Moines insurance industry.
Insurers selling annuities must set aside significant amounts of capital to back their promised returns. Those assets have made them more attractive to private equity funds in recent years, which believe they can invest them more profitably.
Athene USA will continue to be based in West Des Moines, where Aviva Plc built a $135 million headquarters in 2010.
Layoffs are common in corporate acquisitions as buyers eliminate some redundant operations.
“Whoever we keep, we’ll keep in Des Moines,” Belardi said of the I.T. staffers. “I can’t be precise on the number of people we’ll keep, but the bulk of the I.T. people at Athene USA will be in Des Moines.”
