Prudential reinsures £22bn of US assets as Athene takes stake

Prudential has reinsured $27.6bn (£22bn) of US liabilities with Athene Holding, which has made a $500m equity investment in the company's US Jackson business.

The deal will strengthen the balance sheet of Jackson, Prudential's US division, and give Athene an 11.1% stake in the common equity of the business.

Jackson's risk-based capital cover ratio will increase by about 80 percentage points as Prudential prepares the business for a minority initial public offering while considering other options to create an independent US operation.

Athene is a US insurance company that issues, reinsures and acquires retirement savings. It is backed by private equity firm Apollo, which doubled its stake to 34% in March.

Mike Wells, Prudential's chief executive, said: "We are delighted to be forging a new relationship with the team at Athene, given their deep expertise in the US annuity sector and long-term commitment to its development. This agreement is a key step forward in meeting our strategic objectives for Jackson."

The reinsurance agreement takes effect from 1 June and Athene's equity investment is expected to complete in July.