American International Group Inc. (AIG), the insurer that repaid a U.S. bailout, plans to sell all of its shares in AIA Group Ltd. (1299) for as much as HK$50.6 billion ($6.5 billion) in the third offering this year.
AIG, based in New York, is selling about 1.65 billion shares in Hong Kong-headquartered AIA at HK$29.65 to HK$30.65 each, according to a term sheet obtained by Bloomberg News. AIG holds a remaining 13.7 percent stake in AIA, according to data compiled by Bloomberg.
AIG Chief Executive Officer Robert Benmosche is focusing on U.S. life insurance and global property-casualty coverage after divesting units to help repay a government bailout that swelled to $182.3 billion. The New York-based insurer sold about $8 billion of AIA shares in March and September, following a 2010 initial offering that reduced AIG’s stake to 33 percent.
“We’re looking for the right time and the right price to monetize our ownership of AIA,” Benmosche said on an Aug. 3 conference call with analysts. “We have a very good performing company out there.”
AIA, which announced that AIG has started to sell “a significant proportion” of the remaining 13.7 percent stake in a statement to the Hong Kong stock exchange today, didn’t reveal the exact number of shares on sale. Trading of Hong Kong-based AIA is suspended from 9 a.m. local time today.
The shares are being offered today as much as 6.3 percent lower than AIA’s closing price of HK$31.65 on Dec. 14, based on the terms of the sale. AIG expects the shares to be priced on Dec. 17 or Dec. 18, according to AIA’s statement. AIA may resume trading no later than Dec. 18, it added.
AIA, the third-largest Asia-based insurer, has repositioned itself as an independent company after losing share of new business during the global financial crisis because of ties to AIG, which would have collapsed without government aid. The bailout, which the U.S. has since recouped, forced AIG to scale back in Asia, selling units to rivals including MetLife Inc. (MET) and Prudential Financial Inc. (PRU)
Maurice “Hank” Greenberg, who built AIG into the world’s largest insurer during his four-decade leadership of the firm until 2005, called AIA one of his company’s crown jewels. The sale of AIA will reduce volatility in AIG’s quarterly results, which had swung with fluctuations in the market value of the company.
AIG announced more than $65 billion in asset sales since its 2008 rescue, including non-U.S. life insurers, consumer finance units and real estate. AIG said Dec. 10 that a group of Chinese investors agreed to buy 80 percent of its International Lease Finance Corp. plane-leasing unit for $4.23 billion.
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