AIG Increases Strategic Investments in Reinsurance Sector
AIG Expands Strategic Influence with Key Investments
American International Group (AIG) has strategically expanded its investment portfolio by acquiring minority stakes in Convex Group and Onex Corporation. This calculated move aligns AIG's financial interests with a new reinsurance collaboration focused on Convex's specialty re/insurance portfolio, highlighting AIG's approach to balancing risk management and capital efficiency.
AIG has secured a 35% equity position in Convex, amounting to approximately $2.1 billion, alongside a 9.9% stake in Onex for around $642 million. Following these transactions, Onex now holds a controlling 63% share in Convex. This strategic positioning enhances AIG's regulatory compliance and payer-provider dynamics within the industry.
Peter Zaffino, AIG's Chairman and CEO, underscored the significance of these investments, noting their potential to drive long-term earnings growth and improve capital efficiency. He remarked, "We could not be more pleased to announce the completion of our minority ownership stakes in Convex and Onex and are confident that these long-term investments will continue to strategically position AIG for growth in the future and will be accretive to AIG’s earnings and return on equity in 2026 and in future years."
Concurrently, AIG has initiated a quota share arrangement with Convex, effective January 1, encompassing their entire account. This tactical move provides AIG entry into diverse specialty risks and generates fee income through both equity and reinsurance activities. AIG plans to escalate its participation in cessions by 2027 and 2028, reinforcing its regulatory compliance requirements.
These investments empower AIG to enhance its presence in the global specialty re/insurance market and alternative assets, without resorting to full acquisitions. The aligned quota share agreement with Convex allows AIG to manage specialty risk efficiently while maintaining its risk tolerance regarding catastrophic and tail exposures. This reflects AIG's proactive stance in navigating underwriting challenges and industry regulatory requirements.
Moreover, AIG's minority stake in Onex fortifies its connections to third-party capital and private markets. This investment approach highlights a shift towards asset management partnerships, emphasizing capital-light strategies and the convergence of insurance, reinsurance, and alternative capital sectors for strategic growth.
Morgan Stanley & Co. LLC provided financial advice to AIG, with Wachtell, Lipton, Rosen & Katz and Debevoise & Plimpton LLP offering legal counsel. This collaboration and compliance strategy exemplifies how major insurers are tactically deploying minority stakes and quota share agreements to capture growth within specialty lines.