Validus Re, a catastrophe-focused property reinsurer, is being sold by American International Group (AIG) to RenaissanceRe Holdings Ltd. The transaction, which includes AlphaCat and Talbot’s Treaty reinsurance business, is valued at almost $3 billion and is expected to close later in 2023. The Crop Risk Services group will also be divested. AIG will keep portions of the Validus Re legacy business, including the Talbot Underwriting Ltd and Western World units. AIG panel counsel law firms will want to take note.

Panel CounselThe sale will be followed by a strategic partnership between AIG and RenaissanceRe Capital Partners. AIG will invest up to $500 million in the partnership, including the DaVinci and Fontana Re Investment portfolios of RenaissanceRe.

According to AIG, benefits to shareholders include reduced portfolio volatility and increased capital, which in turn will improve the insurer’s quality of earnings and liquidity.

AIG acquired Validus for $5.56 billion in cash in January 2018. In addition to Validus Re, the Validus Group included Talbot (Lloyd’s Syndicate 1183), Western World, a U.S. specialty P&C insurer, and AlphaCat, an investment advisor.

We first covered this story following the purchase announcement, in a post titled “AIG to Acquire Validus.” The acquisition was described by AIG as being a substantial initiative that would help AIG to achieve profitable revenue expansion while also diversifying services across a broader insurance platform.

At the time of the 2018 acquisition, Validus had limited overlap with AIG’s product portfolio. This enabled AIG to add a proven source of underwriting profits while requiring minimal operating integration that would otherwise distract the AIG management team.

Founded in 2005, Validus started as a reinsurer focused on catastrophic property-related damage claims and losses. It grew to become diversified across insurance lines on an international level, working from its Bermuda headquarters and with office locations in the U.S., U.K., continental Europe, and Asia.

Validus lines of coverage include agriculture (crop and livestock), professional lines casualty, marine and energy (cargo, hull, and related claims), and specialty lines such as cyber, workers’ compensation, and aviation.

Implications for AIG Panel Counsel Members

AIG emphasizes that the Validus Re sale will simplify its business model by increasing the focus on primary insurance lines. Since Validus Re is a reinsurer that handles excess and surplus claims after a primary line of insurance coverage is exhausted, this transaction will probably have little effect on most AIG panel counsel members that focus on primary claims.

Aside from the Validus Re transaction, AIG’s General Insurance unit posted a 13% increase in underwriting income in the first quarter of 2023. Combined with strong revenue growth during this financial reporting period, AIG and its shareholders benefit from an improved operating performance.

How to Become Panel Counsel

Getting on an insurance panel for a property and casualty company can be a mysterious process. If your insurance defense law firm is asking how to become panel counsel for a property and casualty insurance carrier, give us a call. Our insurance defense marketing campaigns have helped more than 250 insurance defense law firms in 43 states pursue new client opportunities.

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This article is provided for educational purposes only. It is not to be interpreted as legal advice or an opinion in regard to any topic discussed. The article should not be used as a substitute for legal advice from a licensed attorney in your state. Every situation is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.