AIG's Hancock Raises $751.8 Million Selling PICC P&C Shares

  • AIG sells 361 million shares of Chinese insurer, retains stake
  • CEO Hancock says AIG seeks to enhance financial flexibilty

American International Group Inc., the insurer being pressured by activist investor Carl Icahn to boost returns, raised more than $750 million by selling shares in PICC Property & Casualty Co. after the Chinese company’s stock rebounded.

AIG sold 361 million shares of China’s largest non-life insurer at HK$16.14 apiece, the New York-based company said in a statement Monday. That compares with Monday’s closing price of HK$17.12 for PICC. PICC shares tumbled 7.2 percent to HK$15.88 at 11:22 a.m. in Hong Kong, the biggest decline since Aug. 24.

The U.S. company has been scaling back its investment in the Chinese insurer recently after agreeing in 2003 to take a 9.9 percent stake. Chief Executive Officer Peter Hancock raised about $500 million in March by selling 256 million shares for HK$15.15 apiece. He also exited a stake in plane-leasing company AerCap Holdings NV and has reduced holdings of Springleaf Holdings Inc. to help simplify his business and generate funds for share repurchases.

“By continuing to de-risk our position in PICC P&C, we are focusing AIG’s capital in our core markets and enhancing our financial flexibility,” Hancock said in the statement. “We continue to greatly value our strategic partnership with PICC P&C.”

AIG said gross proceeds from the sale to “certain institutional investors” will be about $751.8 million. Hancock’s company will still hold about 851 million shares, a stake of more than 5 percent of issued share capital.

Reminder to Investors

The funds from the sale are likely to go toward share buybacks, said John Nadel, an analyst at Piper Jaffray Cos. 

The transaction is “a reminder to investors that AIG has significant flexibility, beyond ‘normal’ dividend capacity from operating units, to upsize its return of capital to shareholders,” he said in a note to investors. “While perhaps not intended as part of an overall response to recent activism, we nonetheless view the sale as a positive event.”

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