AIG books $6.7bn loss on sale of island reinsurer – The Royal Gazette | Bermuda News, Business, Sports, Events, & Community

Log In

Reset Password
BERMUDA | RSS PODCAST

AIG books $6.7bn loss on sale of island reinsurer

American International Group made a loss of $6.7 billion on the sale of its Bermudian-based legacy reinsurer, the insurance giant revealed.

AIG reported a net loss of $7.9 billion for the three months from April to June, driven mainly by the hefty accounting loss on the sale of almost all of Fortitude Group Holdings, owner of island reinsurer Fortitude Re, to Carlyle Group and T&D Holdings in June.

Fortitude was set up as a vehicle for AIG's run-off business, that is business that the company no longer writes, but for which it needs to maintain reserves to cover any future claims.

Fortitude Re reinsures about $30 billion of reserves from AIG's Legacy Life and Retirement run-off lines and approximately $4 billion of reserves from AIG's Legacy General Insurance run-off lines.

AIG received about $2.2 billion in sale proceeds for the 76.6 per stake, which took Carlyle and T&D's ownership holding to 96.5 per cent of Fortitude, while AIG retains a 3.5 per cent stake.

The New York-based insurer was hard hit by Covid-19, recording $458 million of pandemic-related losses in the second quarter.

Brian Duperreault, chief executive officer of AIG, said: “The sale of our majority stake in Fortitude Holdings de-risks our balance sheet and reduces our exposure to long-tail run-off liabilities and interest-rate risk.”

He added: “We are effectively navigating the current complex environment due to the strong foundation we built over the last three years.

“While unprecedented and ongoing, Covid-19 remains an earnings, not a capital, event for AIG. We also increased our financial flexibility ending the second quarter with over $10 billion in liquidity.”

Challenging times: Brian Duperreault, CEO of AIG (File photograph)

You must be Registered or to post comment or to vote.

Published August 05, 2020 at 9:00 am (Updated August 04, 2020 at 11:51 pm)

AIG books $6.7bn loss on sale of island reinsurer

What you
Need to
Know
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon