American International Group will sell off its 20 percent stake in the carrier’s Lloyd’s of London insurance operations – it’s latest restructuring move. But the insurance giant will keep an expanded strategic relationship with that entity in play.
Plans call for AIG to sell its interest in Ascot Underwriting Holdings Ltd. and related subsidiaries to the Canada Pension Plan Investment Board, an organization that invests the assets of the Canada Pension plan. At the same time, AIG will keep its strategic partnership with Ascot Underwriting Bermuda Ltd., a wholly-owned subsidiary of Ascot Underwriting Holdings Ltd. that is part of the sale.
What that means is that Ascot Underwriting Bermuda will still be the managing general agent for AIG-Ascot Re, which handles assumed treaty reinsurance business for AIG’s wholly owned subsidiary American International Reinsurance Company Ltd. in Bermuda.
AIG said the sale is worth $1.1 billion, inclusive of the Canada Pension Plan Investment Board’s recapitalization of Syndicate 1414’s Funds at Lloyd’s capital requirements. Out of this total, AIG gets $240 million in net cash proceeds, following the recapitalization and release of the AIG-guaranteed Letter of Credit that currently support’s the syndicate’s Funds at Lloyds.
As part of the agreement, AIG, the Canada Pension Plan Investment Board and Ascot will expand a collective commercial relationship in Bermuda, and make AIG a preferred reinsurer to Syndicate 1414.
Ascot and AIG founded the managing agency and syndicate in 2001. Ascot, a global specialty insurance underwriter, focuses on property insurance, marine insurance and reinsurance.
Robert Schimek, AIG’s CEO, Commercial Insurance, said in prepared remarks that the sale “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.”
The Wall Street Journal reported in late August that AIG was in talks to sell its Lloyd’s insurance operations.