It has been a long time since American International Group (AIG) had much to look forward to. Nearly 5,000 days since its legendary bailout during the 2008 financial crisis, that moment may finally have come, with a little help from asset management giants Blackstone and BlackRock. AIG’s life and retirement business, probably worth at least $22 billion, filed to go public on Monday. It’s a landmark in AIG’s reboot.
Successive chief executives have fought to steady the company, to clean up its businesses, and to reduce its sprawl. When the company chose its current boss Peter Zaffino to succeed then-CEO Brian Duperreault in October 2020, it also unveiled a plan for the split into two companies that may now finally come to fruition by the middle of this year. That’s if market conditions for U.S. initial public offerings perk up from a dismal first quarter, the slowest in six years according to Renaissance Capital.
Private equity powerhouse Blackstone has helped crystallize the operational separation of AIG’s life and retirement division, paying $2.2 billion for a 9.9% stake last July. That arguably sets a floor for the unit’s standalone market value given its decent financial performance in 2021. Blackstone bigwig Jonathan Gray is also lending his credibility to the board of the unit, which will be renamed Corebridge Financial once it goes public.
Blackstone took on management of an initial $50 billion of the future Corebridge’s investments, an amount designed to increase each year. On Monday, AIG said investment giant BlackRock would also look after up to $90 billion of them. That further reduces the business’s reliance on the rest of the group.
AIG has been through a 14-year grind, while investors who remain from before the bailout are still massively out of pocket. In the last year, though, the company’s shares have outperformed fellow post-crisis laggard Citigroup, for example, as well as the broad S&P 500 Index.
That suggests AIG is justified in now looking firmly ahead with the IPO plan. If Zaffino and his colleagues need a talisman for how successful a spinoff can be, they need only look at two of their investment partners. BlackRock, which now manages some $10 trillion of assets, was once essentially part of Blackstone.
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.