Blackstone Group to acquire an equity stake in AIG
The global investment group Blackstone has acquired a 9.9% stake in American International Group’s Life & Retirement business.
The deal, reportedly worth an estimated US$2.2bn, was a multipronged all-cash transaction that included the firm managing an initial $50bn of the business unit’s assets.
The acquisition is Blackstone’s second foray this year into insurance company transactions. It follows on from January’s 80% buyout of Allstate Corp Life Insurance. Blackstone’s insurance solutions team is managing the assets - with reports suggesting it has raised Allstate’s pro forma insurance AUM to an estimated $100bn
Blackstone also gained 2.1% in premarket trading after forging the deal with AIG’s life insurance policies and annuities.
As part of the AIG acquisition, Blackstone will manage the initial sum once the transaction has closed, and the acquisition is expected to reach completion by the fourth quarter of this year. Predictions suggest that by 2027, Blackstone's assets will have grown to $92.5bn.
The move is part of a long-term strategy on behalf of AIG and Blackstone. In October of 2020, AIG revealed its plan to turn its Life & Retirement unit into an independent company
Speaking about the deal, Jonathan Gray, COO and president of Blackstone, 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.”
In October, AIG announced a plan to spin off its Life & Retirement unit into an independent company, and upon transaction completion, Blackstone COO and president will join the board of directors for Life & Retirement.
Further acquisitions by Blackstone’s real estate investment trust include AIG’s stakes in its US affordable housing portfolio - which is worth an estimated $5.1bn. That agreement is also set to be finalised by October.
CB Insights: US Insurtechs Are Competing In A Global Market
In the first half of the year, insurtech companies around the world have raised US$7.4bn, nearly doubling their funding in Q2. According to Digital Insurance, insurtechs have raised US$4.8bn in Q2—an 89% increase in funding from Q1. But US firms are no longer the sole beneficiaries.
What Are the Stats?
Out of the 15 Q2 mega-rounds—those that top US$100mn—only eight included American firms. Pretty good, you might say. That’s over half! But US companies only made up 38% of the deals, which marks a 10% drop from Q1 and a 12% drop from 2020. Technically, therefore, US insurtechs are less influential than they’ve been in the past. But who says this is a bad development?
Despite my American citizenship, I’d argue that a more globally diverse insurance market is only for the best. Many of the world’s citizens who could most benefit from improved insurance services live outside of the States—and deserve local, tech-savvy services.
Why Does This Matter?
You’re always going to see the typical insurtech contenders from Western countries. For instance:
- German-based wefox: US$650mn Series C
- UK-based Bought By Many: US$350mn Series D
- US-based Collective Health: US$280mn Series F
But it’s critical that we address risk across the world. American insurtechs might be some of the most technologically skilled firms in the industry, but it’s not their first goal to address floods in Southeast Asia, crop destruction in China, and COVID complications in South Africa. That’s why we should celebrate that the recent Q2 round included insurtechs from 35 different countries.
According to CB Insights’ Q2 2021 Quarterly InsurTech Briefing, this was the first time that they’d observed insurtech activity in Botswana, Mali, Romania, Saudi Arabia, and Turkey. And ‘from a product, service, distribution, and underlying risk perspective, we—as a society and as an industry—are moving at an unprecedented speed’, says Dr. Andrew Johnston, Global Head of Willis Re InsurTech.
Just ask CB Insights. InsurTech value propositions have resonated with the world.