Carlyle, T&D buy majority stake in AIG firm

Carlyle Group LP is doubling down on insurance assets, increasing its stake in an American International Group Inc.-owned firm.

Carlyle and T&D Holdings Inc., the parent of one of Japan’s largest life insurers, agreed to buy the majority of Fortitude Group Holdings for about $1.8 billion, according to a statement. Carlyle, with a small group of investors, agreed to increase their ownership to 71.5%. T&D also bought 25%.

Private equity firms including Carlyle, Apollo Global Management Inc. and Blackstone Group Inc. have been building their own insurance vehicles in recent years. Apollo helped turn annuity seller Athene Holding Ltd. into a business with a market value of $7.8 billion. Funds affiliated with Blackstone teamed up with other investors back in 2017 to buy annuity-seller Fidelity & Guaranty Life.

Carlyle is using a newly created fund for the deal. AIG will continue to retain a 3.5% stake.

AIG Chief Executive Officer Brian Duperreault has been working to turn around the insurer, which had been battling higher than expected costs on old policies. The Fortitude Re transaction has helped segment off some of AIG’s policies that were held in runoff. Monday’s deal is another step in the process of separating Fortitude Re and helps AIG strengthen its balance sheet, Duperreault said in the statement.

The initial deal Carlyle did with AIG in August 2018 came with an agreement that gave the behemoth investment firm $6 billion from Fortitude to put in its private equity, credit and real asset groups.

Carlyle has deep ties to AIG. The firm hired Brian Schreiber, the top dealmaker at AIG, three years ago as co-head of the financial services team.

The transaction is expected to close in mid-2020.

Willkie, Farr & Gallagher LLP was legal adviser to AIG. Carlyle used Debevoise & Plimpton LLC and Oliver Wyman as advisers. T&D used Citigroup Inc, Nishimura & Asahi, King & Spalding LLP and Appleby as advisers. Fortitude Re tapped Sidley Austin LLP for advice.