Blackstone Group is acquiring a 9.9% equity stake in American International Group's Life & Retirement business for $2.2 billion in a multipronged all-cash transaction that includes the firm managing an initial $50 billion of the business unit's assets, said a joint news release issued Wednesday .
In October, AIG announced a plan to spin off its Life & Retirement unit into an independent company.
Under the terms of the transaction, Blackstone will begin managing the initial sum upon the transaction's closing, which is expected by the end of the third quarter. Over the next six years, the assets managed by Blackstone would increase to $92.5 billion.
When the transaction closes, Jonathan Gray, Blackstone president and chief operating officer, plans to join the Life & Retirement board of directors.
Separately, Blackstone's real estate investment trust, Blackstone Real Estate Income Trust will acquire AIG's interests in a U.S. affordable housing portfolio for about $5.1 billion, in an all-cash transaction. The deal is expected to close in the fourth quarter.
Blackstone is "honored to support" the growth and success of one the world's top life insurers as a stand-alone business," Mr. Gray said in the news release.
"We believe our leading private credit origination platform will play an important role to help meet long-term policyholder obligations while maintaining strong credit quality," Mr. Gray said.
The deal is Blackstone's second insurance company transaction this year. In January, Blackstone announced the acquisition of 80% of Allstate Corp.'s life insurance business, Allstate Life Insurance Co., for $2.8 billion. Mr. Gray said at the time, that Blackstone's insurance solutions team will manage Allstate's assets, bringing the firm's pro forma insurance AUM then to about $100 billion.