AIG received a total of nearly $2.2bn from the sale of 76.6% stake in Fortitude Re
AIG wraps up sale of 76.6% stake in Fortitude Re to Carlyle and T&D. (Credit: HanSangYoon/Wikipedia.org)
American International Group (AIG) has wrapped up its previously announced sale of 76.6% stake in Fortitude Group, a group of companies that operate as Fortitude Re, to The Carlyle Group and T&D Holdings.
The deal, which was announced in November 2019, was closed following receipt of the necessary regulatory approvals and customary closing conditions.
The insurance major received a total of nearly $2.2bn in sale proceeds, which includes the purchase cost of $1.8bn and an additional consideration of $400m, which has been paid according to the terms of the deal.
AIG CEO Brian Duperreault said: “Closing this transaction marks the completion of a significant milestone in AIG’s strategy to efficiently manage our legacy liabilities while strengthening our balance sheet and upholding our commitments to regulators and policyholders.
“Fortitude Re will continue to be an important partner for AIG, and I would like to thank colleagues across AIG and everyone who has worked diligently towards today’s announcement.”
Previously operating as DSA Re, Fortitude Re was founded as a Bermuda domiciled composite reinsurer by AIG in 2017 to house the latter’s legacy portfolio in a separate and distinct capitalised balance sheet.
The legacy portfolio comprised insurance reserves associated with the discontinued lines of commercial property and casualty, and life insurance businesses of the US insurance group.
Following the completion of the deal, Carlyle and its fund investors have increased their stake in Fortitude Re to 71.5%. Carlyle, which purchased the additional stake via a newly created fund, owned a 19.9% stake in the reinsurance business, prior to the deal.
Japanese life insurance company T&D acquired a stake of 25% in the composite reinsurer for $586m, while AIG retained a stake of 3.5%.
The deal was taken up to advance AIG’s and Carlyle’s attempts to make Fortitude Re as a standalone firm and transform it into a premier provider of retroactive reinsurance and legacy run-off management solutions.
T&D president on the stake acquisition in Fortitude Re
T&D representative director and president Hirohisa Uehara said: “Despite increasing uncertainty due to the COVID-19 outbreak around the globe, the successful completion of this transaction is significantly meaningful for T&D and a strategically important step towards continued growth of Fortitude Re and our future business collaboration.
“T&D will focus on supporting Fortitude Re by contributing our expertise in life insurance business in Japan to create synergies with our domestic life insurance business as well as to diversify our business portfolio. We look forward to working together with Fortitude Re, AIG and Carlyle in the closed block business.”