AIG is selling its reinsurance businesses

 

AIG is selling its reinsurance businesses, Validus Re, AlphaCat, and the Talbot Treaty reinsurance, to RenaissanceRe Holdings for $3B, freeing up $400M of capital.  Additionally, it has sold Crop Risk Services and will retain Talbot Underwriting Ltd. and Western World. AIG will get $2.74B in cash and $250M in common shares from RenaissanceRe in exchange for investing in RenaissanceRe's Capital Partners division, which includes managed funds from Fontana Re and DaVinci Reinsurance. According to AIG's CEO Peter Zaffino, the purchase simplifies the company's business model and improves its capital management approach. RenaissanceRe's position as a leading international property and casualty reinsurance is strengthened by the purchase, which increases the scale and broadens its sources of profitability. Both businesses expect to profit from the favorable market conditions and the alluring reinsurance business acquired due to the merger. AIG and RenaissanceRe stocks increased after the announcement. AIG was advised by Evercore Group Llc and JPMorgan Securities Llc, while Morgan Stanley advised RenaissanceRe in the recent transaction.