American International Group Inc. has sold a 76.6% stake in runoff reinsurer Fortitude Group Holdings to private equity investors for $1.8 billion, the insurer announced late Monday.

The Carlyle Group, which bought a 19.9% stake in the Bermuda-based company last year, and T&D Holdings Inc. formed a new fund to acquire Fortitude, which operates Fortitude Re, AIG and the private equity firms said in a joint statement.

After the closing of the deal, which is expected in mid-2020, Washington-based Carlyle will own 71.5% of Fortitude, Tokyo-based T&D will own 25% and AIG 3.5%. AIG will receive a $500 million distribution or additional payments related to the sale, the statement said.

The sale “is another important step in our strategy to efficiently manage our legacy liabilities by further preparing Fortitude Re for independence,” Brian Duperreault, president and CEO of AIG, said in a statement.

Fortitude Re was established in 2018 out of DSA Re, which previously handled AIG’s runoff liabilities.

Source : Business Insurance