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American International Group (AIG) is a step closer to paying back the U.S. government. The insurer has announced that it's planning to float American International Assurance on the Hong Kong stock exchange. A date hasn't been selected yet, but the decision isn't much of a surprise, given that AIG moved it into a special unit, a signal that some sort of liquidity event was on the way.
According to Robert Benmosche, the company's CEO, "The planned listing is in the best interests of policyholders, distribution partners, AIG shareholders and US taxpayers." He continues to say that AIA's roots are in Asia, which made a Hong Kong listing "a natural choice." The timing, according to AIA president and CEO Mark Wilson will depend on marketing conditions and regulatory approvals.
"We will only list when we are ready," Wilson said in The Review, an insurance industry trade publication.
When it does happen, the AIA initial public offering is expected to raise between $5 billion and $10 billion.
This move is consistent with the original plan for AIG when it received its federal bailout money: divest businesses and use the capital raised to repay the government. This week, AIG also moved its American Life Insurance into a special purpose vehicle, as it did with AIA. By giving the Federal Reserve preferred shares in the two special purpose vehicles, AIG was able to reduce its debt by $25 billion.
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