AIG to acquire Hamilton USA for $110m, expands partnership with Hamilton Re

American International Group (AIG) has agreed in principle to acquire Hamilton Insurance Group's US platform for around $110 million while expanding their partnership.

AIG, Bermuda-based Hamilton Insurance Group, and Two Sigma have entered into a memorandum of understanding (MOU), which includes the acquisition of Hamilton US Holdings (HUSA), a wholly owned subsidiary of Hamilton, according to the statement.

Under the MOU, AIG and Hamilton will enter into a stock purchase agreement pursuant to which AIG will acquire all of the outstanding shares of HUSA for a purchase price equal to its book value at closing plus $30 million. HUSA’s book value plus the $30 million premium is currently estimated by Hamilton to total approximately $110 million.

The companies have also agreed to expand their partnership beyond Attune, the data-enabled technology platform launched in September 2016 to serve the US small to medium-sized commercial insurance market.

AIG and Two Sigma Insurance Quantified (TSIQ) will enter into a partnership to leverage TSIQ’s insurance-focused data science and technology expertise for a broad spectrum of commercial insurance underwritten globally by AIG.

In addition, Hamilton Re and AIG will enter into a reinsurance strategic partnership in which Hamilton Re will be provided with the opportunity to participate on market terms in an increased volume of AIG’s ceded reinsurance. The relationship could result in material premium growth for Hamilton Re and provides AIG an alternative source of reinsurance capital.

Furthermore, Attune’s target market will be expanded to include companies with annual revenues of up to $35 million, a target market segment of up to $150 billion in annual gross written premiums. Hamilton will retain its one-third ownership of Attune.

"Putting data science and technology to work in our industry has been on my agenda for some time," said new AIG president and CEO Brian Duperreault. "It was the genesis of Hamilton Insurance Group’s formation and will be a primary agenda item at AIG.

"Through Attune, I’ve learned that cross-industry partnerships – what’s now called insurtech - are the way to go. I can’t think of better partners to have than Hamilton and Two Sigma as we work together to transform our industry."

David Siegel, co-founder and co-chairman of Two Sigma Investments, said: "Insurance is intrinsic to economic growth. Data science and technology open a world of opportunity for this industry, from more practical protection and smarter processes to a better understanding of risk. This can be done while also lowering costs and more efficiently utilizing resources. We are excited that TSIQ will be working with both AIG and Hamilton to further capitalize on these benefits."

"Since our founding, Hamilton and its strategic partner, Two Sigma, have been committed to data-driven underwriting and risk management using automated systems, algorithms and data analytics," Hamilton chairman William Freda added. "We are excited by the transformative potential the MOU represents for Hamilton through the expansion of Attune’s target market and as new reinsurance opportunities of mutual benefit to AIG and Hamilton Re are explored."

Completion of the proposed transactions between AIG, Hamilton and TSIQ is subject to negotiation of definitive agreements and obtaining required regulatory approvals.

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