Blackstone Group Inc. struck a sweeping deal with American International Group Inc. to manage a portion of the assets backing AIG’s life-insurance policies and annuities, a big step by the private-equity firm toward becoming a major player in the insurance industry.
Blackstone will enter into a long-term agreement to manage an initial $50 billion in assets, with the amount increasing to nearly $100 billion over the next six years, the companies said Wednesday. The AIG unit has roughly $200 billion in assets.
The private-equity firm would also pay $2.2 billion for a 9.9% stake in AIG’s life-insurance and retirement-services unit, and Blackstone President Jonathan Gray is to join its board.
AIG, a global insurance conglomerate, is preparing to split off the unit into a separate company, leaving the parent to focus on property-casualty insurance. AIG announced its divestiture plan in October and is continuing to work on an initial public offering of the unit.
Blackstone’s nontraded real-estate investment trust, known as BREIT, also struck a deal to buy $5.1 billion of U.S. affordable-housing assets that AIG has held on its books for decades but aren’t considered core to its operations.
