AIG sells its interest in Ascot subsidiaries but commits to Bermuda
American International Group is to sell its interest in Ascot Underwriting Holdings and related syndicate-funding subsidiary Ascot Corporate Name to the Canada Pension Plan Investment Board (CPPIB), which invests the assets of the Canada Pension Plan.
The total consideration for the deal is $1.1 billion inclusive of CPPIB’s recapitalization of Syndicate 1414’s Funds at Lloyd’s (FAL) capital requirements.
AIG will receive approximately $240 million in net cash proceeds from the transaction after the FAL recapitalization and release of the AIG-guaranteed Letter of Credit currently supporting the syndicate’s FAL. Proceeds reflect AIG’s 20 percent stake in Ascot Underwriting and ownership of Ascot Corporate.
Ascot and AIG founded the managing agency and the syndicate in 2001. As a global specialty insurance underwriter, Ascot focuses on property insurance, marine insurance, and reinsurance.
AIG will maintain its strategic partnership with Ascot Underwriting Bermuda. Although this entity is part of the sale, it will continue to serve as the managing general agent for AIG-Ascot Re, which writes assumed treaty reinsurance business on behalf of AIG’s wholly owned subsidiary American International Reinsurance Company (AIRCO) in Bermuda.
As part of the agreement, AIG, CPPIB, and Ascot intend to expand a collective commercial relationship in Bermuda, and for AIG to be a preferred reinsurer to Syndicate 1414.
“This deal successfully repositions our strategic focus and underwriting capacity to our relationship with Ascot in Bermuda, while monetizing our position in the syndicate at an attractive value and retaining exposure to the syndicate as a reinsurer,” said Robert Schimek, chief executive officer (CEO), commercial insurance.
“We are also pleased to start a collaborative relationship with CPPIB who we see as an ideal partner for Ascot’s outstanding management team.”
Andrew Brooks, CEO of Ascot Underwriting, said: “Ascot and AIG have enjoyed a strong and profitable relationship for over 15 years and we value the support that we have received from AIG throughout that time. We are pleased to be continuing our relationship through Ascot Underwriting Bermuda and look forward to building on the success of that platform.”
