American International Group and The Carlyle Group are in a strategic partnership to build newly established Bermudian-based DSA Re into a stand-alone provider of reinsurance, claims handling, and run-off management solutions for long-dated, complex risks to the global insurance industry.

DSA Re, which was formed by AIG in February, currently reinsures $36 billion of AIG’s Legacy Life and Annuity and General Insurance liabilities.

In a statement, AIG said that utilising Carlyle’s expertise in separating and standing up companies, the two companies plan to build DSA Re into a platform that complements DSA Re’s “financial strength with its strategically differentiated capabilities”.

As part of the transaction, Carlyle will acquire a 19.9 per cent stake in DSA Re and enter into a strategic asset management relationship whereby DSA Re and AIG will, in aggregate, allocate $6 billion of assets into various Carlyle managed strategies across corporate private equity, real assets, and private credit.

Brian Duperreault, AIG’s president and chief executive officer, said: “AIG launched DSA Re to help us efficiently manage our legacy liabilities, honour our policy obligations and maximise financial flexibility. This partnership with Carlyle meets these objectives while allowing AIG to free up capital and participate in the buildout and growth of the business. We look forward to working closely with Carlyle to position DSA Re for long-term success.”

Kewsong Lee, Carlyle’s co-CEO, said: “This strategic partnership extends Carlyle’s investment capabilities into the $15 trillion global insurance industry. Carlyle is excited to deliver our global investment platform across a variety of asset classes to DSA Re, and will work to generate attractive returns for the DSA Re portfolio for many years to come. We have a terrific partner in AIG, and will work closely together to help DSA Re become independent and positioned for growth over time.”

The transaction is expected to close in approximately 60 days, subject to required regulatory approvals and other customary closing conditions.