American Financial Group (AFG) has closed the sale of its annuity businesses to Massachusetts Mutual Life Insurance Company (MassMutual).
The sale included AFG’s Great American Life Insurance Company (GALIC) and its two subsidiaries – Annuity Investors Life Insurance Company and Manhattan National Life Insurance Company. AFG also sold a broker-dealer affiliate to Mass Mutual – Great American Advisors, and an insurance distributor, AAG Insurance Agency.
A release said that the total after-cash proceeds from the sale are about $3.5 billion.
Coinciding with the sale, AFG declared a special, one-time cash dividend of $14.00 per share of common stock in the company. The dividend is payable on June 15, 2021, to holders of record on June 08, 2021. The insurer noted that the aggregate amount of the payment to be made in connection with the special dividend will be about $1.2 billion.
AFG’s board of directors also authorized the repurchase of up to an additional 5,000,000 shares in the company’s outstanding common stock through December 31, 2025.
“The disposition of our annuity business sharpens our focus exclusively on the specialty P&C market and generates substantial excess capital for AFG,” said AFG co-CEOs Carl H. Lindner III and S. Craig Lindner in a joint statement.
The Lindners also stated that returning excess capital to shareholders through the $14 special dividend is “a key component of AFG’s capital management strategy.”
“Our excess capital remains at a significant level, which affords us the financial flexibility to make opportunistic repurchases, pay additional dividends, grow our specialty P&C business organically and through acquisitions and start-ups that meet our target return thresholds,” the co-CEOs added.