American International Group (AIG) has entered into a strategic partnership with The Carlyle Group, a global alternative asset manager, to build AIG’s recently established Bermudian legacy reinsurance platform, DSA Re, into a standalone provider of reinsurance.
DSA Re was launched by AIG in February 2018 as a composite reinsurer of its Legacy insurance portfolio, allowing AIG to consolidate its non-core insurance lines under one specialised run-off team. It currently reinsures $36 billion of AIG’s Legacy Life and Annuity and General Insurance liabilities.
Under the new partnership, Carlyle will acquire a 19.9% stake in DSA Re and enter into a strategic asset management relationship whereby DSA Re and AIG will allocate $6 billion of assets into various Carlyle managed strategies across corporate private equity, real assets, and private credit.
The parties said that 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.
AIG and Carlyle plan to build 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.
Brian Duperreault, President and Chief Executive Officer (CEO) of AIG, said: “AIG launched DSA Re to help us efficiently manage our legacy liabilities, honor our policy obligations and maximize financial flexibility. 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.”
Kewsong Lee, Co-CEO of Carlyle, also commented: “This strategic partnership extends Carlyle’s investment capabilities into the $15 trillion global insurance industry. Carlyle is excited to deliver our global investment platform across a variety of asset classes to DSA Re, and will work to generate attractive returns for the DSA Re portfolio for many years to come. We have a terrific partner in AIG, and will work closely together to help DSA Re become independent and positioned for growth over time.”
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.”
Brian Schreiber, Managing Director and Co-Head of Carlyle Global Financial Services Partners, further stated: “We see tremendous opportunities for Carlyle and DSA Re as insurers look to improve investment yields and drive higher returns on capital. Our partnership will help DSA Re effectively serve this growing market by offering reinsurance solutions to the insurance industry globally across all lines of business.”
The transaction is expected to close in approximately 60 days, subject to regulatory approval. AIG was advised financially by Goldman Sachs & Co. and legally by Sidley Austin for the deal, while Carlyle was advised financially by Citi and legally by Debevoise & Plimpton.
