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Acquisitions
9 Months Ended
Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Acquisitions
16. Acquisitions
On May 2, 2024, in conjunction with the Merger, Brookfield Wealth Solutions indirectly acquired all of AEL’s issued and outstanding common stock not already owned for a consideration of approximately $2.5 billion in cash and 28,803,599 shares of class A limited voting shares of BAM (“BAM Shares”).
Accounting for the Merger is not finalized, and there remains some measurement uncertainty on the acquisition valuation, which is pending completion of a comprehensive evaluation of the net assets acquired within the next twelve months, including but not limited to identifiable intangible assets, deferred income tax assets, and policyholders’ account balances. The financial statements as of September 30, 2024 reflect management’s current best estimate of the purchase price allocation. Final valuation of the assets acquired and liabilities assumed and the completion of the purchase price allocation will occur by the second quarter of 2025. As a result, the excess of the purchase price over the fair value of net assets acquired, representing goodwill of $630 million as of September 30, 2024, may be adjusted in future periods. Goodwill recognized is not deductible for income tax purposes. In conjunction with the Merger and Post-Effective Merger, Brookfield Wealth Solutions agreed to indemnify ANGI for certain liabilities that could arise as a result of merger-related activities, including tax liabilities.
Following the Merger, on May 7, 2024, American National and AEL completed the Post-Effective Merger and subsequent Reincorporation. The Post-Effective Merger has been accounted for as a common control transaction as if the parent, American National, acquired the shares of its subsidiary, AEL, similar to that of a reverse acquisition without a change in basis for the assets acquired and liabilities assumed. American National is therefore regarded as the predecessor reporting entity from an accounting perspective even though AEL is the surviving legal entity.
The business operations of AEL, which are now part of ANGI, contributed revenues of $1.3 billion and a net loss of $250 million to the Company for the period from May 2, 2024 to September 30, 2024. Had the Merger occurred on January 1, 2023, the consolidated unaudited pro forma revenue and net profit would be (i) $6.5 billion and $0.5 billion, respectively, for the nine months ended September 30, 2024; (ii) $1.9 billion and $96 million income, respectively, for the three months ended September 30, 2023; and (iii) $5.8 billion and $289 million, respectively, for the nine months ended September 30, 2023. The pro forma amounts have been calculated using the subsidiary’s results and adjusting them for the revised depreciation and amortization that would have been charged assuming the fair value adjustments to investments, property and equipment and intangible assets had applied from January 1, 2023, together with the consequential tax effects.
The current best estimate of the purchase price allocation reflects the inclusion of updated mortality, base lapse and lifetime income benefit rider utilization assumptions related to AEL’s market risk benefits liability as part of its annual assumptions review which took place in the third quarter of 2024. This resulted in a $45 million increase in both the value of business acquired asset and market risk benefits liability.
The following summarizes the consideration transferred, fair value of assets acquired and liabilities assumed as of the acquisition date:
(Dollars in millions)
Fair value of consideration transferred:
Cash
$2,525 
BAM Shares transferred by the Company
1,111 
Fair value of the Company’s pre-existing interest in AEL
897 
Total consideration
$4,533 
Assets acquired:
Investments
$42,960 
Cash and cash equivalents
13,367 
Accrued investment income
414 
Value of business acquired
7,239 
Reinsurance recoverables and deposit assets
14,963 
Property and equipment
42 
Intangible assets
1,580 
Other assets
670 
Total assets acquired
$81,235 
Liabilities assumed:
Future policy benefits
$310 
Policyholders’ account balances
61,473 
Market risk benefits
3,023 
Notes payable
768 
Subsidiary borrowings
84 
Funds withheld for reinsurance liabilities
8,601 
Other liabilities
2,360 
Total liabilities assumed
76,619 
Less: Fair value of AEL preferred stock 685 
Less: Non-controlling interest 28 
Net assets acquired
3,903 
Goodwill
$630 
Acquisition-related costs of $126 million incurred were recorded as “Operating expenses” in the Consolidated Statements of Operations.