by Paul McBeth
American International Group (AIG) plans to spin off its Asian unit into a publicly traded company through an initial public offering.
AIG hired Blackstone Group to manage the IPO, part of its plans to raise funds to repay US taxpayers. The US government has pumped nearly US$180 billion into the insurer, taking a major stake in the group. American International Assurance, based in Hong Kong, includes AIG Life New Zealand.
"We believe that a public listing for AIA would be in the best interests of all shareholders," said Edward Liddy, chairman and chief executive of AIG, in a statement.
AIA has more than 20 million customers with assets of more than US$60 billion, according to company figures. President Mark Wilson said the announcement gives "a clear and formal roadmap for our independence" from the parent company, and will offer more structure and certainty for the future. The separation will result in a separate board of directors and senior management team for AIA.
AIG didn't say which exchange in Asia AIA may list on. It first announced the separation plan in March, without giving details. The parent company posted a fourth-quarter loss of US$61.7 billion, the largest in U.S. corporate history, reflecting bad bets on mortgage-related securities at the heart of the financial crisis.
Prior to the IPO, AIG plans to merge the Philam Group in the Philippines and ALICO Taiwan into Hong Kong-based AIA.
Shares of AIG dropped 6.5% to US$1.72 in New York yesterday. The stock has tumbled 96% in the past 12 months.
Paul is a staff writer for Good Returns based in Wellington.
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