NEW YORK—A higher-than-expected initial public offering for American International Assurance (AIA), the Asian insurance business of U.S. insurance giant AIG, is poised to give the company—and by extension the U.S. government—a bigger windfall than originally thought.
American International Group Inc. (AIG), the bailed-out insurer, has raised $17.8 billion last week for AIA, its Hong Kong-based insurance arm via an initial public offering (IPO) that valued the company’s shares at 19.68 Hong Kong dollars ($2.53) per share, at the high end of analyst expectations.
The price was higher than expected due to unusually high demand from retail and institutional investors willing to shell out money for the growth prospects of the Asian company and AIA’s market position as one of the leaders of life insurance.
AIA, according to the company, dates back to 1919 and has more than 23,000 employees in the region.
The $17.8 billion capital raised marks the highest IPO for any insurance company, and will go a long way to help repay AIG’s $100 billion debt—as of June 30—to U.S. taxpayers.
“We are very pleased that the offer price has been set at the top end of the range, reflecting a very strong vote of confidence in A.IA.’s future and our ability to capture and realize the exceptional growth potential of the Asia Pacific region,” said Mark Tucker, AIA’s chief executive officer, in a press release.
But the IPO figure is a far cry from the $35.5 billion AIG would have raised had its planned sale of AIA to U.K.’s Prudential Plc gone through. That deal, put in place in the spring, collapsed due to Prudential shareholder opposition.
While AIA was considered AIG’s most valuable asset, the company also recently sold its Japanese branch Alico to MetLife Inc. for more than $15 billion in cash and stock. Last month, AIG also sold additional Japanese businesses AIG Edison and AIG Star to Prudential Financial, which is based in the United States and unrelated to Prudential Plc.
Last month, AIG presented the U.S. government with a final plan of action to repay its massive U.S. debt. The plan involved converting some debt holdings to common shares and continued sales of assets across the board deemed to be non-core to the company’s core insurance operations.
AIG is also planning to sell its Taiwanese insurance company, Nan Shan.
American International Group Inc. (AIG), the bailed-out insurer, has raised $17.8 billion last week for AIA, its Hong Kong-based insurance arm via an initial public offering (IPO) that valued the company’s shares at 19.68 Hong Kong dollars ($2.53) per share, at the high end of analyst expectations.
The price was higher than expected due to unusually high demand from retail and institutional investors willing to shell out money for the growth prospects of the Asian company and AIA’s market position as one of the leaders of life insurance.
AIA, according to the company, dates back to 1919 and has more than 23,000 employees in the region.
The $17.8 billion capital raised marks the highest IPO for any insurance company, and will go a long way to help repay AIG’s $100 billion debt—as of June 30—to U.S. taxpayers.
“We are very pleased that the offer price has been set at the top end of the range, reflecting a very strong vote of confidence in A.IA.’s future and our ability to capture and realize the exceptional growth potential of the Asia Pacific region,” said Mark Tucker, AIA’s chief executive officer, in a press release.
But the IPO figure is a far cry from the $35.5 billion AIG would have raised had its planned sale of AIA to U.K.’s Prudential Plc gone through. That deal, put in place in the spring, collapsed due to Prudential shareholder opposition.
While AIA was considered AIG’s most valuable asset, the company also recently sold its Japanese branch Alico to MetLife Inc. for more than $15 billion in cash and stock. Last month, AIG also sold additional Japanese businesses AIG Edison and AIG Star to Prudential Financial, which is based in the United States and unrelated to Prudential Plc.
Last month, AIG presented the U.S. government with a final plan of action to repay its massive U.S. debt. The plan involved converting some debt holdings to common shares and continued sales of assets across the board deemed to be non-core to the company’s core insurance operations.
AIG is also planning to sell its Taiwanese insurance company, Nan Shan.
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