American International Group (AIG) has revealed plans to further trim its stake in Corebridge Financial (Corebridge), its life and retirement business, by the end of the year.
A secondary offering in June took AIG’s ownership stake of Corebridge to approximately 65%.
In its Q2 earnings call, AIG chairman and CEO Peter Zaffino said the company is looking to further deconsolidate the business before year-end.
“We would expect to do something hopefully before the year ends, subject to market conditions,” Zaffino said.
“Corebridge is doing very well in its business performance and its operations. We have made enormous progress in getting it ready to be a standalone public company once we deconsolidate. We certainly want to continue the sell-downs at a reasonable pace.”
The global insurance giant said its secondary offering of Corebridge common stock was “well received by the market,” with gross proceeds to AIG of US$1.2 billion for around 74 million shares.
The share sale was initially delayed due to increased market volatility fuelled by the banking crisis, AIG said.
The new owners include a strong mix of long-term holders, Zaffino added, which reflects “a more stable and well-diversified shareholder base” for Corebridge.
“These actions demonstrate our commitment to deconsolidation and eventually, full separation,” Zaffino told analysts.
“We continue to explore all options with respect to our remaining ownership of Corebridge that are aligned with the best interest of shareholders.”
Corebridge was formed as a rebrand of AIG’s life and retirement subsidiary, SAFG Retirement Service, in 2021. It sold a portion of the business to private equity firm Blackstone, which retains its nearly 10% holding.
AIG made Corebridge public in September 2022, raising US$1.7 billion in an initial share offering.
AIG also confirmed that proceedings to sell off Laya Healthcare, which it announced back in May, were going “very well.”
Zaffino said Corebridge had retained advisors to analyze strategic alternatives for the disposition of its UK life business.
“We expect to announce a positive outcome from this process in the near term and expect that the proceeds from this divestiture will largely be used for special dividends to Corebridge shareholders,” said Zaffino.
“The dispositions will streamline the Corebridge portfolio and allow its management team to focus on core life on retirement products and solutions in the United States.”
The planned sale of Laya follows AIG’s announcement that it is selling Validus Re, including AlphaCat and the Talbot Treaty reinsurance business, to RenaissanceRe Holdings.
The deal, with a total estimated value of over US$4.5 billion, is expected to close in the fourth quarter.
“We will receive $900 million above the book value of Validus Re, which reflects the improved quality of the portfolio since AIG’s purchase of the business in 2018,” Zaffino said in the earnings call.
AIG has reported a strong financial performance in the second quarter of 2023, propelled by growth in its life and retirement segment as well as lower-than-expected catastrophe losses.
The combined ratio in its general insurance division was 90.9%, despite US$250 million in catastrophe losses. Net premiums written increased by 11% year-over-year and commercial lines net premiums written rose by 13%, driven by growth in North America Commercial Lines.
AIG’s adjusted after-tax income per diluted common share reached US$1.75, the highest since 2007.
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