Thursday, July 15, 2021

Blackstone's PEU Deal with AIG

 A press release stated:

American International Group, Inc. (NYSE: AIG) and Blackstone (NYSE: BX) today announced that they have reached a definitive agreement for Blackstone to acquire a 9.9% equity stake in AIG’s Life & Retirement business for $2.2 billion in an all cash transaction.

As part of this agreement, AIG also agreed to enter into a long-term strategic asset management relationship with Blackstone to manage an initial $50 billion of Life & Retirement’s existing investment portfolio upon closing of the equity investment, with that amount increasing to $92.5 billion over the next six years.    

Private equity underwriters (PEU) love taking stakes in insurance companies so they can steer reserves to their investment offerings.  These hardly seem like arm's length relationships and offer a distinctive PEU odor..  

The FTC will need to give approval, but that is regularly granted.  While the Treasury Department has an insurance office the industry is mostly regulated by states.

Another part of the AIG deal has Blackstone buying AIG's affordable housing portfolio.

Separately, AIG and Blackstone Real Estate Income Trust (BREIT), a long-term, perpetual capital vehicle affiliated with Blackstone, also announced today that they have reached a definitive agreement for BREIT to acquire AIG’s interests in a U.S. affordable housing portfolio for approximately $5.1 billion, in an all cash transaction.

Blackstone helped make rent unaffordable:

A UN housing advisor "singled out Blackstone’s business practices – which they claim include massively inflating rents and imposing an array of heavy fees and charges for ordinary repairs – as having “devastating consequences” for many tenants in countries around the world."  
They accused Blackston of undertaking “aggressive evictions” to protect its rental income streams, shrinking the pool of affordable housing in some areas, and effectively pushing low and middle-income tenants from their homes.

Don't forget Blackstone brought surprise medical billing to the common man and instituted a widespread ad blitz when it looked like Congress might reign in the practice. 

Questions state regulators can ask include:  

1.  How many people with AIG life and retirement products worked for companies that froze their pensions under PEU ownership?   

2.  How many AIG customers can no longer afford to pay rent in their Blackstone owned house?

3.  How many AIG insureds were hit by devastating surprise medical bills?

It's a PEU world where politicians Red and Blue love PEU and the greed and leverage boys make the rules via regulatory capture.  Right Fed Chair Jay Powell?

Update 7-18-21:  Worker mistreatment by the greed and leverage boys can be seen in OpenGate Capital's treatment of Hufcor's Wisconsin employees.  Someone else sees PEU's harm on our healthcare system.