UNION BOSS WARNS IOWA ON APOLLO DEAL FOR AVIVA USA

Jim Baker, research co-ordinator for Unite Here union, warned an Iowa state hearing about the dangers of City-Apollo Global Management being allowed to take over Iowa-based life assurance operation Aviva USA, reports Des Moines Register. Mr Baker said that "there’s a broader conversation happening within the insurance industry, which is whether or not regulators like Iowa Insurance Commissioner Nick Gerhart will put in place the appropriate standards to protect policyholders from these private equity firms". Unite Here represents 20,000 workers at Caesars Entertainment, and 275,000 workers in total in the casino, hotel and food service sectors. Mr Baker said that, subsequent to Apollo and another private equity fund buying Caesars Entertainment in 2008, Apollo had pulled $345m out of the company in transaction, asset management, advisory and monitoring fees. He said that it could do the same to Aviva USA, noting that Apollo took $20m out of its insurance arm, Bermuda-based Athene, via fees in Q1 2013, even though Apollo controls Athene. He further alleged at Apollo was shifting Aviva USA's assets into riskier assets, including Caesar's casino business. He claimed that Apollo would charge Athene $296m in fees if the Iowa regulator approved the deal. Athene president Grant Kvalheim said that the $18.8m casino investment referred to by Mr Baker was moved to Athene in exchange for new shares in the insurer. “We have no interest in acquiring equity in gaming companies, and it will be liquidated and redeployed", he said. Focusing heavily on the job benefits to Iowa, Athene has promised to move its operational headquarters to West Des Moines from South Carolina if the deal is approved, while stating that it is still in acquisitive mode and could expand Athene further. Commissioner Gerhart has 30 days to reach a decision. The only matter of dispute that could justify the Insurance Commission rejecting the deal is how well policyholders can be guaranteed protection, and it is thought unlikely that the deal will be rejected on these grounds, because the only rival bidders for Aviva USA were also private equity firms, which would have generated similar levels of concern.