The European Commission has approved, under the EU Merger Regulation, the acquisition of sole control of American International Group’s (AIG) treaty reinsurance business – which includes Validus Re – by Bermuda-based RenaissanceRe (RenRe).
According to the announcement, the Commission concluded that the proposed acquisition would raise no competition concerns, given the limited horizontal overlaps and vertical relationships resulting from the proposed transaction.
Earlier this year, RenRe announced its plans to acquire Validus Re and all its subsidiaries from global player AIG for around $3 billion.
AIG ‘s treaty reinsurance business includes Validus, a global reinsurance group focused on treaty reinsurance; AlphaCat Managers, Ltd., an investment adviser for a series of insurance-linked securities funds and vehicles, as well as providing reinsurance among other services; and Talbot Underwriting Ltd, a specialty reinsurance and insurance group.
RenRe said the deal will further advance its strategy as it seeks to move further up the global reinsurance ranks, accelerating growth into the favourable market environment.
This acquisition will be immediately accretive to each of RenRe’s three drivers of profit, as well as book value per share, earnings per share and return on equity, Kevin O’Donnell, RenRe’s CEO, has previously commented.
The deal is anticipated to close in Q4 2023 and has been agreed by Directors, RenRe explained, while shareholder approval is not acquired.
Under the terms, AIG will retain 95% of the development on net reserves related to the deal at closing, providing a cleaner acquisition for RenRe to assume and move forwards with.
Since the acquisition of Validus Re was announced – as well as the completion of RenRe’s debt and equity raises – the rating agencies have affirmed RenRes “A+” financial strength ratings.
