American International Group (AIG) has agreed to sell a 9.9% equity stake in its Life & Retirement business to Blackstone for $2.2bn in cash.
Blackstone has also entered into a ‘long-term strategic asset management relationship’ to manage an initial $50bn of Life & Retirement’s existing investment portfolio upon closing of the equity investment.
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The asset amount is expected to increase to approximately $100bn over the next six years. AIG’s unit has approximately $200bn in assets.
In-addition, Blackstone’s president and COO Jon Gray will join the Life & Retirement board of directors when the deal closes, which is expected by Q3 of 2021.
Concurrently, AIG agreed to sell its interests in the US affordable housing portfolio to Blackstone’s Blackstone Real Estate Income Trust (BREIT) for approximately $5.1 billion, also in an all-cash transaction, which is expected to close in Q4 of 2021.
The deal is part of AIG’s efforts to separate Life & Retirement from AIG and deploy the proceeds to support its capital management priorities.
AIG president and CEO Peter Zaffino said: “We look forward to a productive and value-enhancing partnership with Blackstone as we continue to build momentum on our journey to become a top-performing company.”
Jon Gray said: “We are honoured 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.”
Blackstone Real Estate global co-head Kathleen McCarthy said: “These communities provide critical affordable housing and we look forward to being long-term owners. We will make significant investments to improve the apartments while ensuring they remain affordable and in compliance with all rent regulations.”
