AIG to Sell Vast Majority of Fortitude Stake to Carlyle, T&D
November 26, 2019 by Kimberly Chin and Leslie Scism
American International Group Inc. AIG -0.26% said it would sell the vast majority of its stake in Fortitude Group Holdings LLC to the Carlyle Group CG 2.25% LP and Japanese insurance firm T&D Holdings Inc. 8795 -1.42% for roughly $1.8 billion, as the insurer works on paring down its exposure to lines of business it no longer sells.
A new Carlyle-managed fund and T&D will acquire a combined 76.6% ownership interest in the reinsurer. Once the deal closes, AIG will be left with a 3.5% stake. Fortitude’s group of companies operates as Fortitude Re.
AIG said it would receive a $500 million distribution from Fortitude, while T&D said the transaction will contribute “significant synergies” to its existing domestic life-insurance business as well as to diversify its portfolio.
For Carlyle, the transaction represents an opportunity to grow Fortitude and build and manage its runoff insurance liabilities business, continuing a trend since the 2008 financial crisis in which private-equity and other financial firms have moved to acquire blocks of life insurance and annuities, and sometimes entire operating companies. Many of these firms are attracted by the opportunity to manage such assets.