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AIG and The Carlyle Group form strategic partnership with DSA Re

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American International Group and The Carlyle Group have formed a strategic partnership 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.

DSA Re currently reinsures USD36 billion of AIG’s Legacy Life and Annuity and General Insurance liabilities. 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. Utilising Carlyle’s expertise in separating and standing up companies, AIG and Carlyle plan to build DSA Re into a platform that complements DSA Re’s financial strength with its strategically differentiated capabilities.
 
As part of the transaction, Carlyle will acquire a 19.9 per cent stake in DSA Re and enter into a strategic asset management relationship whereby DSA Re and AIG will, in aggregate, allocate USD6 billion of assets into various Carlyle managed strategies across corporate private equity, real assets and private credit.
 
Brian Duperreault (pictured), AIG’s President and Chief Executive Officer, says: “AIG launched DSA Re to help us efficiently manage our legacy liabilities, honour 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, Carlyle’s Co-Chief Executive Officer, says: “This strategic partnership extends Carlyle’s investment capabilities into the USD15 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, Chief Executive Officer of AIG Legacy and DSA Re, adds: “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, says: “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 required regulatory approvals and other customary closing conditions.
 
AIG established DSA Re in February 2018 as a Bermuda-based, composite reinsurer of its Legacy insurance portfolio, consolidating its non-core insurance lines under a specialised team with expertise in run-off, while continuing to ensure it meets its obligations to policyholders.
 
Goldman Sachs & Co was the financial advisor and Sidley Austin LLP was the legal advisor to AIG for this minority interest equity sale.
 
Citi was the financial advisor and Debevoise & Plimpton LLP was the legal advisor to The Carlyle Group.
 

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