DealBook: A.I.G. to Sell Remaining Stake in Asian Insurer

Eric Thayer/ReutersAmerican International Group’s offices in New York.

HONG KONG– The insurance giant American International Group said on Monday that it had started a process to sell off its entire stake in the Asian insurer AIA Group, ending an association that dates back more than 90 years.

A.I.G.’s 13.7 percent stake was worth 52.2 billion Hong Kong dollars, or $6.7 billion, based on AIA’s most recent share price.

Shares in the Asian insurer, which traces its roots to a firm established by an American entrepreneur in Shanghai in 1919, were suspended from trading in Hong Kong on Monday pending an announcement on the outcome of the sale process. In the end, A.I.G. may sell only part of its stake. A.I.G said it would sell the shares to institutional investors and will use the proceeds from the deal for general corporate purposes.

A.I.G., which is based in New York, became a fully private enterprise last week for the first time since 2008 after the Treasury Department sold its remaining shares in the company in a $7.6 billion deal.

The American insurance giant has been gradually reducing its stake in AIA since the Asian insurer was first spun out in a Hong Kong stock market listing in 2010 that raised 159.1 billion Hong Kong dollars, or $20.51 billion — the third biggest initial public offering in the world at the time.

In September, A.I.G. raised about 15.7 billion Hong Kong dollars, or $2 billion, when it sold a portion of its shares in AIA at 26.50 Hong Kong dollars apiece. That deal included a three-month lockup on A.I.G. selling additional shares in AIA, which expired Dec. 10. The Asian insurer’s stock last traded on Friday at 31.65 Hong Kong dollars.

AIA has a network of 260,000 agents and more than 21,000 employees across the Asia-Pacific region, and it is the leader in the life insurance market in several countries in the region.

However, A.I.G.’s move to cash out of AIA doesn’t mean it is exiting Asia altogether. The American company announced plans last month for a Chinese joint venture with the People’s Insurance Company (Group) of China. As part of their cooperation, A.I.G. bought a $500 million stake in P.I.C.C. during the Chinese company’s Hong Kong stock market listing.

The American and Chinese insurers said they planned to distribute life insurance and other insurance products in major cities across China, and intended to sign final documentation of the joint venture by May 31 of next year. A.I.G. also owns 9.9 percent of P.I.C.C. Property and Casualty, a subsidiary of the Chinese group that is also listed in Hong Kong.

This post has been revised to reflect the following correction:

Correction: December 17, 2012

Article source: http://dealbook.nytimes.com/2012/12/16/a-i-g-to-sell-remaining-stake-in-asian-insurer/?partner=rss&emc=rss