AIG says BlackRock will manage up to US$150b of its assets

[NEW YORK] American International Group (AIG) struck a deal with BlackRock to handle as much as US$150 billion of its assets as the insurer continues to prepare for an initial public offering of its life and retirement business.

BlackRock will manage as much as US$60 billion of AIG's global investment portfolio, and as much as US$90 billion of its life and retirement investment portfolio, the New York-based companies said in a statement on Monday (Mar 28). Additionally, BlackRock's Aladdin platform will provide investment-management technology for both AIG and its life and retirement business.

The insurer has been sharpening its focus on its core operations and making necessary preparations to split off its life and retirement unit, which is planned for the first half of this year.

"BlackRock's global scale makes this a significant long-term value creation opportunity for our stakeholders," AIG chief executive officer Peter Zaffino said in the statement. "This is another important milestone as our momentum continues toward the separation of our life and retirement business and future state of AIG." In October, AIG announced a number of leadership changes meant to aid in the transition, including naming a new chief financial officer and creating a a global chief actuary role.

BlackRock is the world's largest asset manager, with about US$10 trillion in client assets as of the end of last year across a range of index-tracking and actively managed investment funds.

"For life and retirement, the partnership with BlackRock creates both strategic and operating flexibility as we reposition asset management and prepare the business to be a standalone company," Zaffino said.

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BlackRock shares rose 1.5 per cent to US$751.84 at 10.01 am in New York, while AIG shares dropped 1.3 per cent to US$63.63.

The agreement with BlackRock follows a deal AIG reached in July to sell a 9.9 per cent equity stake in its life and retirement business to Blackstone for US$2.2 billion in cash. That pact created a "long-term strategic asset management relationship" for an initial US$50 billion from the insurer's life and retirement portfolio, expected to grow to US$92.5 billion within 6 years.

The arrangements with BlackRock will be implemented in phases across AIG's global operations, subject to any necessary regulatory approvals, the companies said on Monday.

BlackRock plans to use its "investment expertise, scale and technology capabilities for the benefit of all of AIG's stakeholders," President Rob Kapito said in the statement. "I am confident in the long-term value BlackRock will deliver as we embark on this journey together." BLOOMBERG