AIG is planning to sell Validus Re, including AlphaCat and the Talbot Treaty reinsurance business, to RenaissanceRe for $2.985 bn, consisting of $2.735 bn in cash and $250 mn in RenaissanceRe common shares. The total estimated transaction value is expected to exceed $4.5 bn.
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. We have spent the last several years transforming Validus Re by re-underwriting the portfolio and driving operating leverage leading to improved outcomes.Peter Zaffino, Chairman and Chief Executive Officer of AIG
AIG will receive all capital in excess of $2.1 bn of shareholders’ equity of Validus Re and achieve future capital synergies of approximately $400 mn from the recapture of reserves as a result of transferring the Validus Re balance sheet to RenaissanceRe, which together, as of December 31, 2022, was over $1.5 bn.
AIG will retain Talbot Underwriting and Western World, which were purchased as part of its 2018 acquisition of Validus Holdings Ltd. and which currently represent approximately $1.6 bn of AIG’s total gross premiums written.
On May 2, 2023, AIG announced that it reached an agreement to sell Crop Risk Services, also purchased as part of the 2018 acquisition of Validus, to American Financial Group for $240 mn; this transaction is expected to close in the third quarter of 2023.
Following the closing, AIG expects to make significant investments in RenaissanceRe’s DaVinci Reinsurance and Fontana Re managed funds through AIG’s Investment portfolio.
As part of RenaissanceRe, Validus Re will benefit from global scale that will allow the business to continue to grow, expand its capabilities and drive value for clients and other stakeholders.