aig-istock
iStock/ PictureLake
22 March 2018Insurance

AIG in $2.5bn debt raise as it acquires Validus

American International Group (AIG) is raising $2.5 billion in debt as it prepares the funding for the acquisition of Bermuda-based Validus Holdings.

In January, AIG unveiled its plan to acquire Validus for an aggregate transaction value of $5.56 billion, funded by cash on hand.

Now, AIG has revealed two debt offerings to finance the transaction. For one, AIG is offering $750 million principal amount of 5.750 percent fixed-to-floating rate series A-9 junior subordinated debentures due 2048. Commencing on April 1, 2028, the junior subordinated debentures will bear interest on their principal amount at an annual rate equal to three-month LIBOR plus 2.868 percent, payable quarterly in arrears on each April 1, July 1, October 1, and January 1, beginning on July 1, 2028.

AIG intends to use the net proceeds of this offering for general corporate purposes, including funding a portion of the consideration for the acquisition of Validus, according to the prospectus. The offering is not contingent on the consummation of the acquisition of Validus.

Separately, AIG is issuing $750 million principal amount of its 4.200 percent notes due 2028 and $1.0 billion principal amount of its 4.750 percent notes due 2048.

The 2028 notes will bear interest at the rate of 4.200 percent per annum, accruing from March 26, 2018 and payable semi-annually in arrears on each April 1 and Oct. 1, beginning on October 1, 2018. The 2048 notes will bear interest at the rate of 4.750 percent per annum, accruing from March 26, 2018 and payable semi-annually in arrears on each April 1 and Oct. 1, beginning on Oct. 1, 2018. The 2028 notes will mature on April 1, 2028. The 2048 notes will mature on April 1, 2048.

Net proceeds to AIG from both notes will be approximately $1.73 billion after deducting the underwriting discounts and commissions and estimated offering expenses payable by AIG. The company intends to use the net proceeds from this offering for general corporate purposes, including funding a portion of the consideration for the acquisition of Validus, according to the prospectus.

Join us at Intelligent Automation in Insurance - London 2018. Spring Special:  Book before March 31st and save £200.

More of today's news

Hiscox CEO becomes new chair of London Market PPL

Insurers face artificial intelligence (AI) liability issue

Europe turns into key insurtech hub

AmTrust expands board of directors with ex-KPMG partner

Ascent appoints former Arch Europe CEO as non-exec chair

Maiden unveils new insurtech innovation initiative

Don't miss our insurtech email newsletter - sign up today

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk


More on this story

Insurance
13 April 2018   American International Group (AIG) has appointed XL Catlin's Anthony Vidovich as chief claims officer, general insurance.
Insurance
1 May 2018   American International Group is not expected to report large reserve charges when it posts 2018 first quarter results on May 2 despite a differing liability assessment with Berkshire Hathaway, according to Morgan Stanley analysts.
Insurance
2 May 2018   Bermuda-based Validus Holdings reported a net loss of $4.1 million for the first quarter of 2018 after a net income of $94.6 million in the same period of 2017.