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AIG spinoff Corebridge valuation: Life and asset management business IPO timing and details in full

By Jenny McCall

12:51, 7 September 2022

A image of the AIG sign outside of the New York Stock Exchange
The IPO price is currently expected to be between $21 and $24 per share - Photo: Shutterstock

US finance and insurance corporation, American International Group Inc (AIG), also known as AIG, has announced it will be demerging from its life asset management business. Here are the details in full.

AIG, which has been planning the spin-off from its subsidiary SAFG Retirement Services for two years now, says SAFG will be rebranded as Corebridge Financial. 

American International Group Inc (AIG) share price chart

AIG is offering 80 million shares of common stock of Corebridge and has granted a 30-day option to the underwriters for the purchase of up to an additional 12 million shares of common stock.

“The initial public offering (IPO) price is currently expected to be between $21 (£18.38) and $24 per share. All of the net proceeds from the offering will go to AIG,” a statement from AIG said.

The shares are expected to trade on the New York Stock Exchange under the ticker symbol “CRBG.”

As part of the demerger, AIG has already sold a stake in its life and retirement unit to US investment firm, Blackstone, which now controls approximately 90 billion of the assets that will sit within the Corebridge portfolio, as well as a further $60bn within AIG’s core business. It is reported that Blackstone paid $2.2bn for its 9.9% stake in the business.

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Why is AIG splitting from its retirement business?

AIG wants to try and streamline its portfolio, after a strategic review. The company believes a split into separate entities will allow it to better manage its products and services. AIG sold its mortgage unit to Arch Capital for $3.4bn in 2018 and now with it spinning off its retirement business, the plan will hopefully help with the group’s overall strategy to better run its business more efficiently and effectively.

AIG will follow in the footsteps of GlaxoSmithKline (GSK), which recently separated from its consumer healthcare division, as well as 3M (MMM) and VW.

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Short position overnight fee 0.0137%
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3,374.84 Price
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Short position overnight fee 0.0137%
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The Corebridge IPO will allow AIG to sell 19.9% of its life and retirement business. AIG is one of the largest retirement services and insurance providers in the US and it has over $411bn client assets under management (AuM).

GlaxoSmithKline (GSK) share price chart

 

What can AIG shareholders expect once the split takes place?

Once the split takes place, shareholders may see a decline in the value of their shares, once the Corebridge assets are removed from AIG’s balance sheet. According to research company, Macquarie Group, shareholders could be looking at a good six months of underperformance from AIG before its share price recovers.

AIG shares will continue to trade on the New York Stock Exchange as normal.

Whart is the current valuation of Corebridge?

AIG first made the announcement that it would float its retirement business back in March, valuations at the time came in at over $20bn, however, the markets have become volatile since then, due to growing geopolitical tensions, rising inflation and interest rate hikes causing havoc. As a result, Corebridge’s valuation may come down.

When will the spin-off take place?

AIG’s spin-off is still expected in 2022.

Markets in this article

AIG
AIG
75.35 USD
-1.63 -2.120%
GSKl
GSK
15.095 USD
0.05 +0.330%
MMM
3M
103.35 USD
-1.5 -1.430%
VOW3
Volkswagen AG (Pfd)
105.15 USD
-0.5 -0.470%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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