The global insurance giant AIG has announced its decision to divest Validus Re in a move to streamline its business model and reduce portfolio volatility, it is claimed. In addition to Validus Re, the deal includes the acquisition of AlphaCat and the Talbot Treaty reinsurance business.
According to industry reports, the transaction will be valued at $4.5 billion, with $2.985 billion being paid in cash and common shares of RenaissanceRe, The sale is expected to provide AIG with considerable liquidity and capital efficiencies. The $4.5 billion sum includes future capital synergies of approximately $400 million and excess capital over shareholders’ equity of Validus Re.
AIG operates in approximately 70 countries, providing insurance solutions to individuals and businesses to protect their assets and manage risks. Validus Re, a renowned reinsurer, is a part of the AIG family and includes the AlphaCat and Talbot Treaty reinsurance business.
RenaissanceRe specialises in reinsurance and insurance coverage
RenaissanceRe, a prominent figure in the reinsurance market, operates globally through various subsidiaries. The company specialises in reinsurance and insurance coverage, offering a wide range of products to its diverse clientele.
As part of the agreement, AIG will retain Talbot Underwriting and Western World, which were acquired when Validus Holdings Ltd. was purchased in 2018. This sale follows AIG’s recent agreement to sell Crop Risk Services to American Financial Group, Inc. for $240 million.
The conclusion of the Validus Re sale is expected to take place in the fourth quarter of 2023, pending regulatory approvals and customary closing conditions.
Peter Zaffino, CEO of AIG, described the announcement as a significant milestone for both AIG and Validus Re. He said, “Today’s announcement represents another key milestone for AIG and is strategically significant for both AIG and Validus Re. For AIG, it further simplifies our business model and reduces volatility in our portfolio, while generating significant cash liquidity and capital efficiencies that enable us to accelerate our capital management strategy.”
Source: FinTech Global
