AIG Will Consider Takeovers for ‘Low Billions’ to Revive GrowthBy and
Insurer seeks expansion opporunities after years of shrinking
Schimek says he seeks capabilities that no other insurer has
American International Group Inc. would weigh acquisitions to bolster high-priority businesses, even as Chief Executive Officer Peter Hancock exits other units, the head of the company’s commercial insurance operation said.
“We are very active in looking at any way to achieve growth, whether it’s organic or inorganic,” AIG Commercial CEO Rob Schimek said Monday in a conference in New York hosted by Barclays Plc. “I would say low billions, or hundreds of millions, is probably a range that I would consider” for a so-called bolt-on deal to strengthen one of his units.
AIG is seeking to highlight expansion opportunities, even as the focus for years has been on selling units, first to repay a U.S. bailout and then to simplify the insurer. Hancock said in January he would divest about $7 billion of assets to return capital to shareholders and concentrate on key businesses. Schimek said the insurer has plenty of scale, and that any potential takeovers would be to make key businesses more competitive.
“We have to just make sure that we’re continuing to stay focused on the main objectives and not get distracted by too many small bolt-on acquisitions,” he said. “We already have size and scale and depth and breadth of capability, and so I don’t need to get bigger as my primary objective. I want to create more value. I want to be able to do things for our clients that no other insurance company in the world can do.”
Hancock announced in January a deal to sell a broker-dealer network, then said last month that he would sell a mortgage guarantor, United Guaranty Corp., to Arch Capital Group Ltd. for $3.4 billion. Activist investor Carl Icahn, who won board representation this year, has applauded Hancock’s approach and added that AIG should still sell a unit in Japan.
AIG has made smaller purchases since Hancock became CEO in 2014. The next year, he took a stake in investigative firm K2 Intelligence to help clients protect themselves against cyber attacks, and acquired a controlling interest of an employee-benefits business from ING Groep NV. Wearable-devices firm Human Condition Safety got an investment from the insurer this year.
“If I can find opportunities to add a valuable specialty capability that we currently don’t have or that would be very difficult for us to build out, that’s attractive to us,” Schimek said. “You should expect that we’ll be very thoughtfully evaluating whether or not there’s opportunities to do something that will create even greater value.”
Schimek was named last year to run the commercial operation, which is AIG’s largest business. He has overseen a decline in premium revenue while working to limit risk and exit less-profitable contracts. AIG dropped 59 cents to $58.08 at 10:29 a.m. in New York, extending it’s slump this year to 6.3 percent.