AIG, Carlyle Group Partner to Build Reinsurer, Run-Off Firm for Complex Risks

Global insurer American International Group and private equity and financial services firm The Carlyle Group are forming a partnership to build a standalone provider of reinsurance, claims handling and run-off management services for long-dated, complex risks to the global insurance industry.

The effort will transform DSA Re, which AIG established in February 2018 as a Bermuda-based, composite reinsurer of its own legacy insurance portfolio. DSA Re currently reinsures $36 billion of AIG’s legacy life and annuity and general insurance liabilities.

As part of the transaction, Carlyle will acquire a 19.9 percent stake in DSA Re and enter into a strategic asset management relationship whereby DSA Re and AIG will, in aggregate, allocate $6 billion of assets into various Carlyle managed strategies across corporate private equity, real assets and private credit.

DSA Re’s risk portfolio, claims operation and administration capabilities will provide the foundation for a platform that the two companies believe can be scaled over time.

Brian Duperreault, AIG president and chief executive officer, said the move is in keeping with AIG’s original intent in forming DSA Re, which was to efficiently manage legacy liabilities while honoring policy obligations and maximizing 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,” Duperreault said.

The partnership extends Carlyle’s investment capabilities into the insurance arena. Kewsong Lee, Carlyle’s co-chief executive officer, said Carlyle will deliver its 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.”

The transaction is expected to close in approximately 60 days.

Goldman Sachs was the financial advisor and Sidley Austin was the legal advisor to AIG for this minority interest equity sale. Citi was the financial advisor and Debevoise & Plimpton was the legal advisor to The Carlyle Group.