Morningstar

RenaissanceRe to Acquire American International Group Reinsurance Operations

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Securities In This Article
American International Group Inc
(AIG)

RenaissanceRe announced it will acquire American International Group’s AIG treaty reinsurance operations, which include Validus Re, AlphaCat Managers, and a portion of Talbot. The purchase price is $2.99 billion, which equates to 1.4 times book value. We like this deal strategically for American International Group. In our view, reinsurance is a very difficult area to develop a moat, and also an area that typically adds volatility to underwriting results. While we don’t believe American International Group’s P&C business currently benefits from a moat, shedding less attractive areas pushes the company in the right direction, in our view. Further, we see the purchase price as reasonable. However, the deal is too small to have a material impact on our $66 fair value estimate, which we will maintain.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Brett Horn, CFA

Senior Equity Analyst
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Brett Horn, CFA, is a senior equity analyst, AM Financial Services, for Morningstar*. He covers P&C insurers and payment companies. He also developed the insurance valuation model by the equity research team.

Before joining Morningstar in 2006, Horn worked in the banking industry for about a decade, most recently as a commercial loan officer for First Bank, where He was responsible for underwriting loans and managing relationships with middle market clients. Before that, Horn worked for Mizuho Corporate Bank, where He managed loan portfolios and client relationships, primarily with Fortune 500 companies.

Horn holds a bachelor’s degree in business administration, with a concentration in finance, from the University of Wisconsin. Horn also holds a master’s degree in business administration from the University of Illinois. He also holds the Chartered Financial Analyst® designation.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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