AIG to Offer Some Shares of Mortgage Insurance Unit to Public
January 22 2016 - 7:14PM
Dow Jones News
By Leslie Scism
American International Group Inc. plans to offer shares of its
mortgage insurance unit to the public while retaining a large
majority interest, according to a person familiar with the matter,
a move that signals the insurance conglomerate likely won't satisfy
investors who are calling for the company to break into three
parts.
Separately, AIG is finalizing a deal to sell its network of
broker-dealers, people familiar with the matter said.
The deals are part of a broader effort to slim down, an effort
that began when the insurer nearly collapsed into bankruptcy
proceedings before receiving one of the biggest bailouts of the
financial crisis, since fully repaid. Recently, AIG has come under
increasing pressure to take more drastic steps to improve results.
Activist Carl Icahn and fellow billionaire investor John Paulson
have called for the company to break into three parts.
AIG Chief Executive Peter Hancock has said that while he
understands many investors' desire for urgent action to boost the
company's overall financial results, a breakup isn't in
shareholders' best interests.
Analysts expect the mortgage insurance unit, one of AIG's
fastest-growing businesses over the past couple of years, to be
valued at between about $5 billion and $7 billion. The
broker-dealer sale would total hundreds of millions of dollars,
analysts say. AIG has a market value of about $70 billion.
While AIG has been aggressively buying back its shares with the
cash it is generating from operations and asset sales, its
profitability lags behind big rivals like Travelers Cos.
Mr. Hancock is set to update investors on the company's strategy
in a session Tuesday morning, and the two moves are expected to be
discussed.
AIG's possible divestiture of the mortgage insurance unit was
reported by The Wall Street Journal in October. Reuters reported
earlier Friday on the decision to proceed with a partial
divestiture.
Write to Leslie Scism at leslie.scism@wsj.com
(END) Dow Jones Newswires
January 22, 2016 18:59 ET (23:59 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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