AIG has spun off its life and retirement business via an IPO raising $1.68 billion. Find out everything we know about AIG’s spin off.
AIG spin off
American International Group has demerged its life and retirement business - a plan that's been in the work for about two years now - via what’s known as a ‘carve out’. This is what happens when a company lists shares of a unit on public markets.
Learn about the difference between spin offs, split offs and carve outs.
Usually, a carve out is a step along the road to becoming a standalone company, which is what AIG plans for its retirement service after it’s listed. The parent company of the life and retirement business – currently called SAFG Retirement Services – will be rebranded as Corebridge Financial.
Corebridge was listed in the biggest initial public offering of 2022 - at the time - selling 80 million shares at $21 each. It raised over $1.68 billion and values the new company at $13.6 billion.
As part of the spin off plan, AIG also sold a stake in its life and retirement unit to Blackstone, which now controls around $90 billion of assets that will sit within the Corebridge portfolio – and a further $60 billion within AIG’s core business. Blackstone paid $2.2 billion for its 9.9% stake.
Learn more about what an IPO is.
Why is AIG splitting up?
AIG is separating its life and retirement business in an attempt to streamline the insurance firm’s sizeable portfolio. The company has been going through a strategic restructuring for a while, as it planned to split into three separate entities to better manage operations: a property-casualty unit, a life and retirement unit and a mortgage offering.
In 2017, AIG sold its mortgage unit to Arch Capital for $3.4 billion, so the spin off of the life and retirement business is the next step in this clean up.
Other upcoming spin offs include:
What happens to AIG stock when the company splits?
AIG shares will continue to trade on the New York Stock Exchange as normal. Shares of AIG rallied after the company originally announced the spin off, as the long-term goal of these corporate restructurings is to create shareholder value.
However, the move could mean a short-term decline in value after the new company takes its assets off AIG’s balance sheet. Research by Macquarie Group suggests that the new entity could underperform for a period of about six months while it finds its footing.
What does the AIG split mean for shareholders?
Unlike in other types of demergers, AIG shareholders will not receive any shares of the new company automatically. So, to get exposure to the Corebridge unit, investors will need to buy stock once it’s listed.
It’s also important to remember that shareholders will be losing the diversity benefit that the broad portfolio of AIG offered. So, investors may need to consider rebalancing their assets.
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