American International Group, New York, closed its acquisition of American General Corporation, Houston, on Aug. 29, just a day after it received its final state approval for the deal it originally announced in April.
The Texas Department of Insurance approved the acquisition, valued at $23 billion, on Tuesday.
With American General, AIG acquires the third-largest writer of annuities, the leading issuer of fixed annuities and the second-largest issuer of life insurance in the U.S.
American Generals stockholders approved AIGs bid Aug. 15 and will get 0.5790 of a share of AIG common stock, valued at $46, in exchange for each share of American General common stock.
AIG Chairman Hank Greenberg said one of the first orders of business for the newly expanded company will be to identify and plan revenue-enhancement programs.
“We will begin immediately to implement these programs and are enthusiastic about realizing the benefits of bringing American General into the AIG family,” he said.
“In addition to its U.S. life insurance business, American General brings a strong asset-accumulation and retirement savings business that complements our existing retirement savings business through SunAmerica,” Greenberg said. “AIG is now one of the largest retirement savings providers, and we have an even stronger platform to capitalize on the significant growth we see for this global business.”
In a news conference, Greenberg specifically mentioned Hong Kong, Japan and Italy as potentially profitable markets but added, “theres not a country in the world where retirement savings arent important.”
American General can help AIG reach these markets with new products such as variable annuities and life/mutual fund combinations, he said. “We have all those products in our kit, and our distribution is growing to deliver them.”
Greenberg said layoffs in the combined life operations are “inevitable,” but added that AIG wont release details about how many employees will be affected until after Labor Day.
He noted that AIG and its SunAmerica subsidiary have a total of about 13,000 financial planners, “a great many” of whom are licensed to sell life insurance products like those offered by American General.
He estimated American General will add 8% to 10% annually to AIGs earnings.
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.