What happened
American Equity Investment Life Holding (AEL 0.25%) stock had a volatile week, falling 14% from last Friday's close as of 1:45 p.m. ET today, according to data from S&P Global Market Intelligence. Shares surged 3.1% higher for the day as of the same time, giving them some positive momentum to end the week. The stock is down 8% year to date.
It lagged the major indexes as the Dow Jones Industrial Average was up 3.9%, the S&P 500 was up 5.6%, and the Nasdaq jumped 8% for the week as of Friday afternoon.
So what
American Equity Investment Life is a life insurer and annuity provider, which specializes in fixed index annuities. It had a wild week, posting third-quarter earnings on Monday that topped analysts' estimates with adjusted earnings per share of $0.99 -- down from $1.46 per share a year ago.
But it was news on the next day, Nov. 8, that sent the stock price plummeting some 31% from the close of the market Monday to Tuesday afternoon. The sell-off was due to the resignation of board member Sachin Shah, the CEO of Brookfield Asset Management Reinsurance Partners, from the American Equity board over a disagreement on the company's strategic direction.
"It is clear based on recent events that there has been a fundamental change in the strategic direction of the Company, and that change in my view represents a material departure from the AEL 2.0 strategy," Shah wrote in his resignation letter, according to the Securities and Exchange Commission (SEC) filing. "As previously communicated, neither I nor Brookfield Reinsurance can support this change in strategy as being in the best interests of the Company, its policyholders or its shareholders." Shah said Brookfield will not nominate a replacement.
Bloomberg first reported the news Tuesday, saying the dispute centered on American Equity's announcement on Nov. 8 that it acquired an equity stake in 26North Partners, an investment company led by Josh Harris that offers private equity, credit, and insurance and reinsurance products and solutions.
Now what
Brookfield Asset Management Reinsurance is the largest investor in American Equity, with an 18% stake in the company. In the SEC filing, Brookfield is requesting "a resale shelf registration statement" to sell roughly 9.1 million of its shares, or roughly 57% of its holdings in the company.
American Equity was able to bounce back from those lows on Tuesday as the stock pushed higher on Thursday's good inflation report. Also on Thursday, the American Equity board approved a $400 million stock buyback plan, in accordance with an effort to improve the stock price.
All in all, a busy week. There is a lot for investors to unpack here, and there are obviously different views on the strategic direction of the company. Best to monitor where things go from here.
