2023-05-22 16:56:28 ET
RenaissanceRe ( NYSE: RNR ) said Monday it will acquire American International Group's ( AIG ) treaty reinsurance business Validus Reinsurance , including AlphaCat and the Talbot Treaty reinsurance unit, for ~$3B.
The deal is expected to boost RenaissanceRe's ( RNR ) underwriting, fee and investment income. The deal amount consists of ~$2.74B in cash and $250M in RenaissanceRe ( RNR ) shares.
AIG ( AIG ) will receive all capital in excess of $2.1B of shareholders' equity of Validus Re and achieve future capital synergies of ~$400M from recapture of reserves as a result of transferring the Validus Re balance sheet to RenaissanceRe ( RNR ).
The total deal value to AIG ( AIG ) is expected to exceed $4.5B. Cash consideration will be funded through RenaissanceRe's ( RNR ) available funds and proceeds from issuing equity and debt.
AIG ( AIG ) will retain 95% of the development on net reserves at closing. Once the deal closes, AIG ( AIG ) plans to make substantial investments in RenaissanceRe's ( RNR ) Capital Partners business.
"For AIG ( AIG ), the deal further simplifies our business model and reduces volatility in our portfolio, while generating significant cash liquidity and capital efficiencies," said CEO Peter Zaffino.
The deal is expected to close in Q4.
More on RenaissanceRe, AIG
RenaissanceRe posts mixed Q1 results
AIG Q1 earnings climb, topping consensus
AIG's Underwriting Performance Deserves A Higher Valuation
For further details see:
RenaissanceRe to acquire Validus Re from AIG for $3B