Carlyle, T&D complete US$1.8bn Fortitude acquisition from AIG

June 4 2020 by Yvonne Lau

Japan’s T&D Holdings (T&D) and private equity house Carlyle Group (Carlyle) have completed a US$1.8 billion acquisition of Fortitude Group Holdings (Fortitude Re) from AIG, following regulatory approval.

The deal was announced last November.

T&D and Carlyle will take a combined 76.6% interest in Fortitude Re — with T&D holding 25%, Carlyle taking 71.5% (through a newly-created fund), leaving AIG with 3.5%.

Kewsong Lee, co-chief executive at Carlyle, said that the “partnership with Fortitude Re represents an important strategic investment that is focused on growing the platform to bring innovative solutions to the insurance industry.”

For T&D, the successful completion of the deal marks a strategically important step. Hirohisa Uehara, representative director and president at T&D, noted: “T&D will focus on supporting Fortitude Re by contributing our expertise in life insurance business in Japan to create synergies with our domestic life insurance business as well as to diversify our business portfolio.”

AIG will receive around US$2.2 billion in sale proceeds, which includes the US$1.8 billion purchase price tag, along with “additional consideration paid.”

Brian Duperreault, chief executive of AIG, commented: “Closing this transaction marks the completion of a significant milestone in [our] strategy to efficiently manage our legacy liabilities — while strengthening our balance sheet and upholding commitments to regulators and policyholders.”

Duperreault added that “Fortitude Re will continue to be an important partner for AIG.”

Bermuda-headquartered Fortitude Re was set up as DSA Re in 2018 to manage AIG’s legacy portfolio. It looks after approximately US$30 billion of reserves from AIG’s legacy life and retirement run-off lines and US$4 billion of reserves from the insurers’ general insurance run-off lines.

The acquisition will strengthen AIG and Carlyle’s efforts to develop Fortitude Re independently and bolster its positioning positioning as a “premier provider of retroactive reinsurance and legacy run-off management solutions for long-dated, complex risks.”

T&D is based in Tokyo and its subsidiaries include Taiyo Life, Daido Life, T&D Financial Life and T&D Asset Management.

For more on AIG’s recent senior personnel shake-up in Asia, see here.