AIG Takes Stake in Convex Group in $7B Onex-Led Acquisition
Insurer deepens specialty focus and forges broader strategic alliance with Onex, investing in both the asset manager and the reinsurance specialist.
American International Group Inc. (AIG) is making a significant strategic investment in specialty insurer Convex Group as part of a larger $7 billion acquisition led by private equity firm Onex Corporation, a move that deepens AIG’s focus on the high-margin property and casualty market.
The deal, announced Thursday, will see Onex become the majority shareholder in Convex with a 63% stake. AIG’s participation marks a multi-faceted alliance, as the insurance giant will not only acquire a stake in Convex but also take an equity position in Onex itself. Furthermore, AIG plans to invest up to $2 billion in Onex investment funds, cementing a broad strategic relationship with the Canadian asset manager.
This transaction represents a significant strategic step for AIG CEO Peter Zaffino, who has been methodically reshaping the company to concentrate on its core P&C insurance business. The move follows the successful spin-off and public offering of its life and retirement unit, Corebridge Financial, as AIG seeks to streamline operations and deploy capital into its core underwriting operations. By partnering to take a stake in Convex, AIG gains expanded access to the complex and profitable world of specialty reinsurance—which covers large-scale, high-risk assets like aviation and energy—without assuming the full risk of an outright acquisition.
According to the company's official announcement, the investment is structured to be immediately beneficial to AIG's financial performance. The company stated that the deal is expected to be accretive to its earnings and return on equity within the first year after closing, a detail aimed squarely at reassuring shareholders of the transaction's value.
With a market capitalization of approximately $43.4 billion, AIG is a titan in the global insurance industry. Shares of AIG were trading around $78 ahead of the announcement, in the upper portion of their 52-week range. The company's stock has an average analyst target price of over $88, reflecting general optimism about its strategic direction.
The investment in Convex, a well-regarded global specialty insurer, provides AIG with a capital-efficient vehicle for growth in a market segment experiencing favorable conditions. Specialty insurance markets have seen rates harden in recent years, making it an attractive area for underwriters. The broader alliance with Onex also gives AIG exposure to a leading global asset manager, creating potential synergies in investment strategy and capital management.
This transaction signals AIG’s intent to aggressively pursue growth in its core business while leveraging strategic partnerships to enhance shareholder returns. For investors, the move is a clear indicator of management's confidence in the specialty insurance sector and its commitment to a more focused, capital-light model for expansion.