T&D and Carlyle Group buy majority stake in reinsurer

Japan's T&D Holdings (T&D), a publicly listed insurance holdings company of T&D Insurance Group, and a newly created fund of global investment firm The Carlyle Group, have joined hands to acquire from AIG a 76.6% ownership interest in Fortitude Group Holdings. The acquisition price was approximately $1.8bn.

Fortitude's group companies operate as Fortitude Re

After closing, ownership interests in Fortitude Re will include Carlyle and its fund investors at 71.5% (including a 19.9% stake previously acquired by Carlyle in November 2018), T&D at 25% and AIG at 3.5%, the three companies said in a joint statement.

AIG will receive a $500m non-pro-rata distribution, which if not paid by the later of 13 May 2020 or transaction close will result in an additional payment from the new Carlyle-managed fund and T&D based on their Fortitude Re ownership interest.

Benefits

This transaction furthers AIG’s and Carlyle’s efforts to stand up Fortitude Re as an independent company and position it as a premier provider of retroactive reinsurance and legacy run-off management solutions for long-dated, complex risks to the global insurance industry. The transaction will enhance Carlyle’s ability to support Fortitude Re’s growth plans, provide Fortitude Re access to Carlyle’s wide array of investment strategies and position it for long-term success.

T&D brings additional industry and international expertise to develop Fortitude Re’s strategically differentiated capabilities. With the backing of Carlyle, T&D and AIG, Fortitude Re will pursue global opportunities to successfully acquire and manage legacy insurance portfolios.

Mr Brian Duperreault, AIG’s president and CEO, said that the deal is another important step in AIG's strategy to efficiently manage its legacy liabilities by further preparing Fortitude Re for independence, while strengthening AIG's balance sheet and maintaining its primary focus on upholding policyholder and regulatory commitments.

Mr Hirohisa Uehara, T&D’s representative director and president, said, “We are really honoured to invest in Fortitude Re, which has developed a sophisticated platform for managing life and P&C insurance liabilities. We have longstanding relationships with both AIG and Carlyle, and we believe Fortitude Re’s closed book business will contribute significant synergies to our domestic life insurance business as well as diversification of our business portfolio. Additionally, we look forward to supporting Fortitude Re’s growth by leveraging our years of experience as a Japanese life insurer.” The transaction is expected to close in mid-2020, subject to required regulatory approvals and other customary closing conditions.

T&D

T&D Holdings is a publicly listed insurance holdings company of T&D Insurance Group, which is comprised of three core life insurers, Taiyo Life Insurance, Daido Life Insurance and T&D Financial Life Insurance. Its headquarters are located in Tokyo. Daido Life has had a long-term business partnership with AIG in Japan since 1971. In June 2019, T&D established a wholly owned investment subsidiary, T&D United Capital which is the entity that will acquire a 25% ownership interest in Fortitude Group Holdings directly, with an aim of accelerating the strategic initiatives of T&D.

Source: Asia Insurance Review