AIG to sell stake in life and retirement unit to Blackstone for $2.2bn

American International Group (AIG) has agreed to divest a stake of 9.9% in its life and retirement business to Blackstone for $2.2 billion in an all-cash deal.

As part of the deal, the US insurance giant also agreed to forge a long-term asset management relationship with Blackstone to manage an initial $50 billion of the life and retirement business’ existing investment portfolio after closing. Over the next six years, the amount will increase to $92.5 billion.

After the closing of the transactions, which are anticipated to simultaneously occur by the end of Q3 2021, Jon Gray, who is Blackstone’s president and chief operating officer will join the AIG Life & Retirement board of directors.

Jon Gray said: “We are honored to become AIG’s strategic partner, supporting the growth and success of one the world’s top life insurers as a standalone business.

“We believe our leading private credit origination platform will play an important role to help meet long-term policyholder obligations while maintaining strong credit quality.”

The deals are contingent on HSR approval and other customary closing conditions.

AIG to sell stake in life and retirement unit to Blackstone for $2.2bn. Photo courtesy of Marc Bryan-Brown/Wikipedia.org.

Separately, AIG has signed an agreement with Blackstone Real Estate Income Trust (BREIT), a perpetual capital vehicle affiliated with Blackstone, under which the latter will acquire its interests in a US affordable housing portfolio for nearly $5.1 billion, in an all-cash deal.

The housing portfolio deal, which is subject to customary closing conditions, is likely to close in Q4 2021.

Peter Zaffino – President and CEO of AIG said: “Establishing a cornerstone partnership on several fronts with such a highly regarded organization as Blackstone validates the strength of our market-leading Life & Retirement business and provides it with additional growth opportunities, provides AIG with flexibility as we continue to work to separate Life & Retirement from AIG, and results in significant new capital for AIG to deploy to support our capital management priorities.

“AIG has stewarded the Affordable Housing portfolio for more than 30 years. While the highly specialized assets subject to this transaction are attractive investments, they are no longer core to AIG’s long-term investment strategy. We believe Blackstone has the right expertise and commitment to stakeholders to manage these assets going forward.