|
| Winter sun |
| Lauren Silva Laughlin / Jan 21, 2010, 00:32 IST |
|
AIG: American International Group’s Arctic winter is being lit up by its deal to sell American Life Insurance. The bailed-out US insurer is selling Alico to MetLife, according to the Wall Street Journal, for approaching $15 billion. Robert Benmosche, the AIG boss, was right to wait. And he’s right to offload the unit now rather than hang on for an IPO. But the dark days aren’t over.
All the same, the deal with MetLife is a step forward. Last summer, the Federal Reserve Bank of New York decided to swap a portion of a $25 billion loan for a $9 billion preferred equity interest in Alico and a similar $16 billion interest in American International Assurance. AIG originally sought to take Alico public as soon as possible thereafter.
But Benmosche then took the helm, and decided to wait for a better time. That turned out to be a good move. Markets have stabilised and insurance sector valuations have increased to the point where a deal now makes sense. Sure, valuations may continue to rise. But if MetLife is offering $15 billion, that's not a bad price considering AIG is a highly motivated seller. And this way, taxpayers get $9 billion back in one shot, rather than gradually as could be the case with an IPO.
Still, AIG has much more to do. MetLife hasn’t yet signed on the dotted line. And even if it does, the repayment associated with the Alico deal would take only a smallish bite out of the $180 billion-odd the government committed to AIG all-told. It’s an unexpected shaft of sunlight — but AIG’s winter isn’t over yet.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
