AIG will use IPO to sell life and retirement unit

[NEW YORK] American International Group has decided to use an IPO to sell a 19.9 per cent stake in its life and retirement business, chief executive officer Peter Zaffino said on Friday, dashing prospects for potential bidders.

AIG weighed interest from competitors, but "at this time, we believe an IPO remains the optimal path forward to maximise value for our stakeholders and to position the business for additional value creation as a stand-alone company," Mr Zaffino said in a conference call with analysts, his first as CEO of the company.

"An IPO allows AIG to retain maximum flexibility regarding the operations of the business as well as the separation process." Mr Zaffino said AIG is working with "urgency" to complete the separation this year but that the timing could slip into the first quarter of 2022.

The life and retirement unit, which sells insurance and annuities, reported US$941 million in adjusted pre-tax income in the first quarter, up 57 per cent from a year ago, AIG said on Thursday.

But premiums fell by 53 per cent to US$600 million.

Mr Zaffino said AIG's general insurance business, which reported a 6 per cent increase in gross premium revenue to US$10.7 billion in the quarter, would continue to see revenue growth at that level in the remainder of 2021.

AIG, which began to retool its underwriting to make its core business more profitable after Mr Zaffino and former CEO Brian Duperreault arrived in 2017, said that process is largely complete and it is now "pivoting" to focus on growth.

REUTERS