Personal equity investment huge Blackstone has as soon as again demonstrated its appetite for access to profit, returns and drift from the insurance coverage and reinsurance market by signing an agreement with international firm AIG, which benefits to the tune of $2.4 billion, a new investment collaboration and by securing a partnership that might deepen with a leading investment group.In what AIG CEO Peter Zaffino calls a “foundation collaboration,” AIG has accepted offer Blackstone a 9.9% equity stake in its Life & & Retirement company for $2.2 billion in an all cash deal.
AIG has actually been seeking ways to monetise the Life & & Retirement service, possibly through a sale, however this looks a primary step in taking and changing the ownership on new capital to support this business, while likewise increasing AIGs coffers considerably.
This likewise puts Blackstone into the Life & & Retirement insurance coverage and reinsurance company, an area other private equity giants like and are included (think Apollo, KKR etc).
The benefits do not stop there, as AIG will also get in into a long-lasting tactical asset management relationship with Blackstone, as part of this collaboration deal.
This will see Blackstone managing an initial $50 billion of Life & & Retirements existing financial investment portfolio when the equity financial investment closes, which is set to increase to $92.5 billion over the next six years.
Thats a clear declaration of intent from Blackstone and a substantial move to source long-term insurance coverage premium float from the life and retirement market.
These plans are expected to close in Q3.
Blackstone is likewise taking a U.S. cost effective real estate portfolio held by AIG off the insurers hands for around $5.1 billion, which will be acquired by the Blackstone Real Estate Income Trust (BREIT).
Monetising this kind of long-term investment, most likely at a profit to the original cost, maximizes more capital for AIG and adds considerable firepower.
Peter Zaffino, President and Chief Executive Officer of AIG commented, “Todays announcement is a crucial turning point for AIG. Developing a cornerstone partnership on a number of fronts with such a highly concerned company as Blackstone verifies the strength of our market-leading Life & & Retirement service and provides it with additional development chances, supplies AIG with versatility as we continue to work to different Life & & Retirement from AIG, and leads to considerable brand-new capital for AIG to release to support our capital management concerns.
” AIG has actually stewarded the Affordable Housing portfolio for more than 30 years. While the highly specialized assets based on this deal are appealing financial investments, they are no longer core to AIGs long- term investment technique. We think Blackstone has the ideal competence and dedication to stakeholders to handle these properties going forward.
” We anticipate a value-enhancing and productive partnership with Blackstone as we continue to develop momentum on our journey to become a top carrying out business.”
Jon Gray, President and Chief Operating Officer of Blackstone, will join the AIG Life & & Retirement Board of Directors, likewise stated, “We are honored to become AIGs tactical partner, supporting the growth and success of one the worlds leading life insurance providers as a standalone organization. Our company believe our prominent personal credit origination platform will play an essential role to assist satisfy long-term policyholder obligations while keeping strong credit quality.”
The partnership appears a significant move, both for AIG and for Blackstone, representing a method for AIG to free capital to do more on the underwriting side of its company (along with likely to please its shareholders), while Blackstone gets an entry-point into the life, retirement and annuities area, in addition to a significant bundle of insurance-related properties to invest.
” AIG has actually stewarded the Affordable Housing portfolio for more than 30 years. While the highly specialized properties subject to this deal are attractive financial investments, they are no longer core to AIGs long- term investment technique. We think Blackstone has the ideal knowledge and dedication to stakeholders to manage these properties going forward.