AIG’s Wintrob Sees No Curbs on Bidding for Hartford Units
Jay Wintrob, the head of American International Group Inc. (AIG)’s life insurance business, said the bailed-out firm could consider bidding on units that Hartford Financial Services Group Inc. is seeking to divest.
“In terms of ability, there’s no limits on us,” Wintrob said today at the UBS Asset Gathering Conference in Boston. While AIG doesn’t rely on acquisitions for growth, “we’ve been acquisitive in the past and we’ll continue to look,” he said.
Hartford, named after the Connecticut city where it’s based, said yesterday it will stop selling individual annuities and seek buyers for its individual life, retirement-plan and Woodbury Financial Services units. New York-based AIG has sold more than $50 billion in assets to repay a 2008 U.S. bailout.
Wintrob said growth at his SunAmerica subsidiary will still come “the good, old-fashioned way -- product sales, net flows, broad distribution and disciplined pricing, and I think that will continue to be the major focus.”
Hartford’s planned divestments were announced after a strategic evaluation led by Chief Executive Officer Liam McGee, who was hired to revive the firm after losses on equity-linked variable annuities led to a 2009 taxpayer bailout. Billionaire John Paulson, whose hedge fund is Hartford’s biggest shareholder, has pressed McGee to boost the shares by splitting up the insurer entirely, a premise that McGee rejected.
AIG “could certainly take some costs out” if it bought businesses from Hartford, said Josh Stirling, an analyst at Sanford C. Bernstein & Co. Still, an acquisition could distract management from its main goal of winding down the government’s investment, Stirling said. He rates the insurer market perform, which means the stock will probably trade within 15 percent of the Standard & Poor’s 500 Index during the next year.
AIG declined 1.8 percent to $27.98 at 4:15 p.m. in New York, while Hartford fell 3.3 percent to $21.30.
“What AIG has to be very concerned about is making a bulletproof case that each acquisition or divestment serves a strategic interest,” Phillip Phan, a professor at the Johns Hopkins Carey Business School in Baltimore, said in a phone interview. The U.S. Treasury Department, the insurer’s majority shareholder, will support deals only if they build value, rather than entrepreneurial ventures into new fields, he said.
Matt Anderson, a spokesman for the Treasury, declined to comment on potential acquisitions.
SunAmerica has enough scale and diversity of products, so it doesn’t need another company’s platform, Wintrob said. The insurer will be focused on acquisitions that can be “additive and achieve higher returns,” he said.
AIG sold non-U.S. life insurers, a consumer lender and other businesses to pay back its rescue, which swelled to $182.3 billion as the U.S. extended more credit and lowered the interest charged. Chief Executive Officer Robert Benmosche, 67, has been focusing on global property-casualty coverage and U.S. life operations as he seeks to wind down the Treasury’s stake.
The insurer bought the shares of Japan’s Fuji Fire and Marine Insurance Co. that it didn’t already own last year to expand non-U.S. operations at the Chartis property-casualty unit. In August, AIG’s plane-leasing subsidiary, which wrote down part of its aging fleet last year, agreed to acquire a business from AerCap Holdings NV that buys used aircraft and disassembles them to sell parts, particularly engine components.
AIG repaid the balance on a Federal Reserve credit line last year and the Treasury Department converted its preferred stake into 92 percent of the company’s common stock. That holding has been cut to 70 percent in two share sales.