American International Group (AIG) and The Carlyle Group have announced a strategic partnership to build Bermuda-domiciled DSA Re into a standalone provider of reinsurance, claims handling, and run-off management solutions for long-dated, complex risks to the global insurance industry.
At present DSA Re reinsures $36 billion of AIG’s legacy life and annuity and general insurance liabilities. According to AIG, DSA Re’s diversified risk portfolio, strong claims operation, and efficient administration capabilities provide the foundation for a platform that can be scaled over time.
In a statement AIG and Carlyle said that utilising Carlyle’s expertise in separating and standing up companies, the two companies plan to build DSA Re into a platform that complements DSA Re’s financial strength with its strategically differentiated capabilities.
As part of the transaction, Carlyle will acquire a 19.9 percent stake in DSA Re and enter into a strategic asset management relationship whereby DSA Re and AIG will, in aggregate, allocate $6 billion of assets into various Carlyle managed strategies across corporate private equity, real assets and private credit.
“AIG launched DSA Re to help us efficiently manage our legacy liabilities, honour our policy obligations and maximise financial flexibility,” said Brian Duperreault, AIG’s president and chief executive officer (CEO). “This partnership with Carlyle meets these objectives while allowing AIG to free up capital and participate in the build-out and growth of the business. We look forward to working closely with Carlyle to position DSA Re for long-term success.”
James Bracken, CEO of AIG Legacy and DSA Re, added: “DSA Re’s experienced team, capabilities, diversified risk portfolio and strong capital position, along with Carlyle’s investment expertise and success in building strong franchises, provide a foundation to build a competitive provider of tailored run-off solutions.”
The transaction is expected to close in approximately 60 days, subject to required regulatory approvals and other customary closing conditions.
AIG established DSA Re in February 2018 as a Bermuda-based, composite reinsurer of its legacy insurance portfolio, consolidating its non-core insurance lines under a specialised team with expertise in run-off, while continuing to ensure it meets its obligations to policyholders.
AIG, DSA Re, Carlyle, Group, strategic, insurance, partnership, solutions, Bermuda-domiciled, reinsurance, legacy