AIG, Carlyle Complete Deal Creating Run-Off Reinsurer, Fortitude Re

The Carlyle Group has completed its acquisition of a 19.9 percent stake in Fortitude Group Holdings, a reinsurer operating as Fortitude Re, formerly known as DSA Re.

The AIG-Carlyle transaction, first announced in August, is part of a plan 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 transaction has now closed following receipt of regulatory approvals and satisfaction of other customary closing conditions.

The effort transforms 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.

In addition to acquiring a 19.9 percent stake, Carlyle entered 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.

Brian Duperreault, AIG president and chief executive officer, has 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 new company’s website says it is “uniquely positioned to evaluate potential acquisitions across all lines of business and geographies.”

Fortitude Re has office locations in Bermuda, New York and Nashville.

James Bracken is the chief executive officer of Fortitude Re. Bracken was previously chief financial officer of AIG General Insurance. Craig Buck is the chief financial officer of Fortitude Re. Prior to this role, he was the head of Insurance Company Capital & Asset/Liability Management for AIG Life and Retirement. Sean Coyle, formerly global head of Finance Operations and Reengineering at AIG, is the chief operating officer.