American International Group (AIG) and The Carlyle Group (Carlyle) have entered into a strategic asset management relationship with DSA Re, through which they plan to position DSA Re as a standalone platform to provide solutions for insurance liabilities around the world.
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 specialized team with expertise in run-off. The firm currently reinsures US$36 billion of AIG’s legacy life and annuity and general insurance liabilities. It has a diversified risk portfolio, strong claims operation, and efficient administration capabilities, which AIG hopes to scale with Carlyle’s backing.
Brian Duperreault, AIG’s president and CEO, said: “AIG launched DSA Re to help us efficiently manage our legacy liabilities, honor 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.”
As part of the deal, Carlyle will acquire a 19.9% 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.
“This strategic partnership extends Carlyle’s investment capabilities into the $15 trillion global insurance industry,” commented Kewsong Lee, Carlyle’s co-CEO. “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.”
Brian Schreiber, managing director and co-head of Carlyle Global Financial Services Partners, added: “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. It remains subject to required regulatory approvals and other customary closing conditions.