AIG introduced a break-up plan on Monday, saying it will break up its life insurance coverage enterprise from its bigger property and casualty arm, lower than 4 years after combating off an try by activist investors to pressure it to just do that.
The corporate additionally stated that Peter Zaffino, the 53-year-old head of the property and casualty insurance coverage unit, would succeed Brian Duperreault, 73, who has been group chief govt since Could 2017 and would grow to be govt chairman.
AIG didn’t give particulars of how the break-up could be structured, however its administration and board “imagine an easier company construction will unlock important worth for shareholders”, Mr Duperreault stated in an announcement.
The life insurance coverage and retirement companies unit accounts for about one-third of income at AIG, which has a $27bn market capitalisation.
Traders and analysts have been urging the corporate to contemplate such a break up for years, and two activist hedge fund managers, John Paulson and Carl Icahn, agitated for the transfer from 2015 to 2017, taking massive stakes within the firm and even briefly taking seats on its board.
AIG is the one US-listed insurer combining life and property and casualty models, making it tough to match with friends and depriving it of a pure investor base.
Earlier requires a break-up got here when the final insurance coverage enterprise was not ready to face by itself and life and retirement have been a gradual supply of revenue for the corporate, stated one individual conversant in its evolving considering.
UK’s Prudential can also be looking for to separate off Jackson, its US life business, underneath stress from the activist investor Daniel Loeb.
Mr Duperreault has been given credit score for returning AIG to profitability, after earlier struggling to restore a enterprise and status tarnished by the monetary disaster, when it made disastrous spinoff trades within the housing market, resulting in a federal bailout.
By de-risking the insurance coverage portfolio and being disciplined on pricing, the corporate was profitable on a full-year foundation in 2019 for the primary time because the disaster.
Mr Zaffino has lengthy been seen because the inheritor obvious to Mr Duperreault, who employed him away from Marsh and McLennan just some months after taking the highest job.
AIG shares are down about 40 per cent this yr because the pandemic has induced rates of interest to fall, crimping income. The shares rose greater than 6 per cent in after-hours buying and selling on Monday.
— to www.ft.com
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