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Takeover target Validus Re under review by AM Best

AM Best has placed the credit ratings of Validus Re under review with developing implications (File photograph)

The credit ratings of Validus Reinsurance Ltd have been placed under review with developing implications by AM Best in the wake of its upcoming acquisition by fellow Bermudian reinsurer RenaissanceRe Holdings Ltd.

AM Best made the announcement in relation to the financial strength rating of A (Excellent) and the long-term issuer credit ratings of “a” (Excellent) of Validus Re and Validus Reinsurance (Switzerland) Ltd, a subsidiary of Validus Holdings Ltd.

Concurrently, AM Best has commented that the credit ratings of the remaining members of American International Group Inc remain unchanged.

These rating actions follow last week’s announced definitive agreement whereby AIG will sell Validus Re and Validus, including AlphaCat Managers Ltd and the Talbot Treaty reinsurance business, to RenaissanceRe for $2.99 billion, consisting of $2.74 billion in cash and $250 million in RenaissanceRe common shares.

AIG is also expected to receive all capital in excess of $2.1 billion of shareholders’ equity of Validus Re and achieve future capital synergies of approximately $400 million from the recapture of reserves due to transferring the Validus Re balance sheet to RenaissanceRe, which together, as of December 31, was more than $1.5 billion. This brings the total estimated transaction value to more than $4.5 billion.

The transaction is expected to close in the fourth-quarter of 2023, subject to regulatory approvals and other customary closing conditions.

Subsequent to the closing, AIG expects to make significant investments in RenaissanceRe’s DaVinci Reinsurance Ltd and Fontana Reinsurance Ltd managed funds through AIG’s investment portfolio.

AM Best said the ratings would remain under review until the deal closed and AM Best completed its evaluation of organisational changes and strategic positioning within the new structure. The under-review status may be updated in the interim period if new facts and circumstances present themselves.

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Published May 29, 2023 at 6:10 pm (Updated May 29, 2023 at 8:09 pm)

Takeover target Validus Re under review by AM Best

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