Aeolus investor Elliott shows appetite for life risks (and assets)

Multi-strategy hedge fund investor Elliott Management Corporation, which acquired a stake in ILS and reinsurance linked investors Aeolus Capital Management Ltd. just over a year ago, has demonstrated its appetite for insurance related investments by buying into a U.S. life insurance group.

Elliott Management has teamed up to acquire a majority stake in U.S. life insurer Prosperity Life Insurance Group, LLC, along side insurance-focused private investors Wand Partners, Inc., which was also involved in the acquisition of a controlling interest in Aeolus in early 2017, and the current CEO of Prosperity Anurag Chandra.

The investment partnership are buying 100% of the interests of the majority shareholders in Prosperity Life Insurance, which include funds managed by investors Reservoir Capital Group, LLC and Black Diamond Capital Partners.

Prosperity, which owns Shenandoah Life Insurance Company, SBLI USA Life Insurance Company, Inc. and S.USA Life Insurance Company, Inc., is a provider of protection, supplemental and asset accumulation products through various distribution channels.

The company is expected to hold onto its current management, strategy, distribution and employee base, but notes that the investment gives it access to “significant additional capital and resources to accelerate organic and inorganic growth.”

That’s exactly the kind of investment opportunity Elliott and Wand will be looking for, one where they can deploy capital for growth into a business that will also accumulate an asset base of its own.

CEO Anurag Chandra said, “This ownership transition to another experienced investor group with a long-term investment horizon and significant financial resources will serve as a key source of competitive advantage.”

“We are very pleased to have reached agreement to acquire Prosperity and look forward to backing this entrepreneurial and successful management team,” added Jonathan Pollock, Partner and Co-Chief Executive of Elliott, and leader of this initiative. “Elliott and Wand have partnered on insurance investments since 2009 and have a successful track record of supporting incumbent management teams with access to significant capital resources to strengthen the financial profile of the businesses and accelerate their growth. We look forward to building on Prosperity’s sound platform for stability and growth.”

Elliott and Wand have been involved in a number of acquisitions in the insurance and reinsurance space over the years, with Aeolus the most recent, but prior to that the pair worked together on deals involving the Paraline Group, Ltd. with its catastrophe focused insurer ICAT Managers LLC, and third-party managing agent at Lloyd’s Asta Capital Limited.

Wand has been involved in a number of investments focused on life risks in the past, but Elliott less so.

The transaction further underscores that major investors are attracted to a diverse range of insurance risk-linked investments, but in the case of a life platform it also perhaps signals a desire to emulate what other private investors have done in the life space, such as Apollo with Athene.

The potential to scale out a life platform that brings asset accumulation related benefits back to its investors is clear and it’s possible Elliott and Wand see this as an attractive prospect for them at this time.