American International Group (AIG), a global insurance behemoth headquartered in the US, has announced its decision to divest Validus Re to RenaissanceRe Holdings Ltd.
RenaissanceRe, a prominent figure in the reinsurance market, will acquire the reinsurer Validus Re, along with AlphaCat and the Talbot Treaty reinsurance business, for a total deal value of $4.5bn.
AIG has decided to sell Validus Re to further streamline its business model and reduce portfolio volatility. The sale, pegged at $2.985bn in cash and common shares of RenaissanceRe, is expected to provide AIG with considerable liquidity and capital efficiencies. With the inclusion of future capital synergies of about $400m and excess capital over shareholders’ equity of Validus Re, the total transaction value is anticipated to exceed $4.5bn.
AIG is a leading global insurance organisation, providing insurance solutions in approximately 70 countries to help businesses and individuals protect their assets and manage risks. Validus Re, part of the AIG family, is a renowned reinsurer including the AlphaCat and Talbot Treaty reinsurance business.
On the other hand, RenaissanceRe is a global provider of reinsurance, operating through various subsidiaries. The company is primarily engaged in reinsurance and insurance coverages, providing a broad range of products to its diverse clientele.
AIG will retain Talbot Underwriting and Western World, which it purchased as part of the 2018 acquisition of Validus Holdings Ltd. This sale follows AIG’s recent agreement to sell Crop Risk Services to American Financial Group, Inc. for $240m.
The sale of Validus Re is expected to conclude in the fourth quarter of 2023, pending regulatory approvals and customary closing conditions.
Peter Zaffino, AIG CEO, 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.”
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