AIG creates new Bermuda run-off subsidiary
AIG has created a Bermuda-domiciled legal entity named DSA Reinsurance Company (DSA Re) which will act as AIG’s main run-off reinsurer.
The company said that DSA Re’s primary purpose is to reinsure AIG’s Legacy Life and Retirement and Legacy General Insurance run-off lines. AIG said that DSA Re will allow it to derive operational efficiencies by consolidating its legacy books in one legal entity and under one management team, while continuing to honor all policyholder commitments and client relationships.
The amount expected to be reinsured upon receipt of all regulatory approvals represents approximately $37 billion or over 80 percent of Legacy total insurance reserves and will be backed with approximately $40 billion of invested assets managed by AIG Investments.
Since its establishment, Legacy has returned $10 billion of capital to AIG Parent, surpassing its original goal of $9 billion. Total book value impairments and losses on sales from Legacy investments that were sold from September 1, 2015 through December 31, 2017 totaled $1 billion.
Legacy reported fourth quarter 2017 adjusted pre-tax income of $411 million, a fall from the $1.1 billion is made in the same quarter of 2016. However, the fourth quarter of 2016 included a pre-tax gain of $1.1 billion from the sale of commercial real estate in South Korea offset by unfavorable prior year loss reserve development.