Everest Group will not renew retail insurance policies as they expire over the coming year and has sold the renewal rights to AIG.

Gross written premium from the combined Asia-Pacific, US and European portfolios is about $US2 billion ($3.05 billion). Terms of the deal were not disclosed.

Everest did not respond to queries from insuranceNEWS.com.au asking whether the deal will affect personnel in Australia.

It retains its wholesale and specialty insurance business, led by London-based Jason Keen, and its reinsurance business, which made up more than 70% of GWP last year. It will continue to provide AIG with reinsurance, and will be responsible for claims associated with the current retail portfolios.

“We will be able to write these policies within our existing balance sheet with no incremental capital required,” AIG CEO and chair Peter Zaffino said. “We see these portfolios as very additive to our business. We expect these renewal rights transactions to drive incremental growth in our general insurance portfolio.”

Everest CEO and president Jim Williamson says the business will now be “optimally positioned to respond to evolving market needs”.

In a presentation to investors, Everest said the deal streamlines its operating model and strengthens focus on its core businesses.

“The transaction will result in meaningful total value to Everest, including the release of significant capital over time,” it said.

Everest expects a balance sheet charge of $US250-$US350 million ($381-$534 million) associated with the transaction.

Mr Williamson says 45% of Everest’s US casualty business did not renew in the latest quarter, and the wholesale and specialty portfolios outperform retail by about 10 combined operating ratio points.

“We’ve confronted our legacy casualty issues head on, optimised the portfolio and positioned Everest for a new chapter,” he said. “The long-term profitability and growth outlooks for the market segments we’re focused on are excellent.

“We believe AIG is ideally positioned to maximise the value of this portfolio going forward, and we were pleased to conclude our renewal rights transaction with such a close partner.

“I think over time that portfolio is going to perform really well and will be an asset to our partner, AIG, as they take it on.”