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AIG seeks more strategic acquisitions, to offset Validus profits against deferred tax: Report

24th January 2018 - Author: Steve Evans

Insurer American International Group (AIG) has not finished looking for other potential acquisitions, following the announcement of its $5.56 billion acquisition of Validus, according to a report.

AIG flagThe FT spoke with AIG CEO Brian Duperreault who told the newspaper that he would continue to look at opportunities.

“To the extent that I can continue to add strategic fits like this one, I’m going to do it,” the FT reports Duperreault as saying.

Duperreault is also reported to have singled out life and pensions operations outside the U.S. and small business insurers as potential acquisition targets.

Additionally, the FT reported that AIG will be able to minimise the taxes it pays on Validus profits thanks to its very large deferred tax asset, which is a hangover from its bailout by the U.S. government.

Gallagher Re

Duperreault told the FT that on Validus, “To the extent that they make money, that money will be applied against our asset.”

AIG will turn Validus into a U.S. tax paying entity, hence the benefit of having a large deferred tax asset to offset the purchased reinsurers profits against could be meaningful and have made this acquisition even more attractive for the firm.

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