American International Group Inc. and Blackstone Group Inc. said late Wednesday they have reached multibillion-dollar deals giving the private-equity giant a major foothold in life insurance and annuities as well as affordable housing.
The companies said they have reached a deal for Blackstone to acquire a 9.9% equity stake in the insurance company’s life and retirement business for $2.2 billion.
As part of the all-cash deal, Blackstone will manage an initial $50 billion of AIG’s life and retirement’s investment portfolio, with the amount rising to $92.5 billion in the next six years, the companies said.
Both transactions are expected to close by the end of the third quarter, and Jon Gray, Blackstone’s chief operating officer, will join AIG’s life and retirement board, the companies said.
Separately, AIG and a real-estate income trust affiliated with Blackstone will acquire AIG’s interests in a U.S. affordable housing portfolio for about $5.1 billion, also in an all-cash transaction, the companies said. That deal is expected to close in the fourth quarter.
The REIT in June said it was acquiring Home Partners of America Inc., a lease-to-buy homeownership company, in a deal that valued the company at $6 billion.
Wednesday’s partnership with Blackstone “validates the strength of our market-leading life & retirement business and provides it with additional growth opportunities, provides AIG with flexibility as we continue to work to separate life & retirement from AIG, and results in significant new capital for AIG to deploy to support our capital management priorities,” AIG Chief Executive Peter Zaffino said in a statement.
As for the affordable-housing portfolio, the assets included in the deal “are no longer core to AIG’s long-term investment strategy. We believe Blackstone has the right expertise and commitment to stakeholders to manage these assets going forward,” he said.