U.S. insurer AIG has filed a long-awaited IPO of its asset management and life insurance business that could add value to the unit, which will be called Corebridge Financialover $20 billion.
The company, which will have $410 billion in assets under management, is by far the largest to publicly file for a U.S. IPO so far this year. Market volatility caused by concerns about rising interest rates and the war in Ukraine led many candidates to put their plans on hold. The companies raised just $2.4 billion in U.S. listings this year, the slowest quarter since the start of 2016.
AIG’s split was first promised in 2020 as part of a plan to revive its faltering fortunes. The company is the only major US insurer to combine life insurance units with property and casualty insurance, which hampers comparisons with its peers.
The life and asset management business is known as SAFG, but AIG said it would be renamed Corebridge after the IPO. It sells individual and group retirement savings products as well as life insurance.
“As Corebridge, we will continue to proudly partner with finance and retirement professionals to help their clients feel confident and motivated today, and in control of their future,” said Kevin Hogan, Managing Director of AIG’s life and retirement businesses.
the S-1 Registration Statement filed on Monday did not give a value for Corebridge, but people familiar with the process gave a figure of around $20 billion. That matches the $2.2 billion Blackstone paid in November for a nearly 10% stake in SAFG. Major bankers JPMorgan Chase declined to comment.
AIG has seen periods of restructuring since its $185 billion taxpayer bailout during the 2008 financial crisis, selling assets in areas such as aircraft leasing and consumer credit.
Between 2015 and 2017, it resisted pressure from activist investors Carl Icahn and John Paulson to separate its general and life insurance businesses. But the management changed its mind a few years later.
The move comes amid a wider industry overhaul of the old conglomerate model, with insurers such as London and Hong Kong-listed Prudential opting to break up sprawling groups into local units.
Hours before the S-1 filing, AIG announced plans to divest management of up to $150 billion in fixed income and private equity assets to BlackRock, in one of its largest mandates. type. Some $90 billion of the assets will be part of Corebridge’s portfolio and $60 billion are part of AIG’s core business.
More and more pension funds, endowments and insurers are turning to these types of arrangements, often referred to as “outsourced investment manager” arrangements. They allow asset owners to tap into outside investment expertise and potentially reduce costs by shifting regulatory and operational responsibilities to a larger fund manager such as BlackRock.
As of March last year, nearly $2.5 billion in assets were under management in OCIO arrangements, up 22% year-on-year, according to an annual report industry survey by Pensions & Investments.
AIG had previously agreed to cede management of up to $92 billion in life and retirement assets to Blackstone when the latter acquired its stake in SAFG.
BlackRock, the world’s largest asset manager with assets under management of $10 billion at the end of 2021, ranked fourth last year in terms of fully discretionary assets managed through such CIO deals. outsourced and expanded its reach in the region.
Last year, the group took over management of more than £21.5 billion in pension assets from British Airways, and Gary Shedlin, chief financial officer of BlackRock, predicted at a conference in December that ‘other significant transactions would be forthcoming. “You start seeing some and. . . we’re talking about $50 billion warrants. We’re really in a unique position to be able to leverage the whole business,” he said.
The AIG-BlackRock arrangement will be phased in and is subject to regulatory approvals. Corebridge and the rest of AIG will use BlackRock’s investment management technology, known as Aladdin.
“BlackRock is honored to have been selected to serve AIG as a strategic partner. We look forward to leveraging our investment expertise, scale and technology capabilities for the benefit of all AIG stakeholders,” said Rob Kapito, Chairman of BlackRock, in the company announcement. ‘OK.