Insurance titan American International Group is preparing to spin off 2 its international life insurance franchises and has appointed a new executive to spearhead the divestitures.
Under a deal inked with the Federal Reserve Bank of New York, AIG, New York, will prepare American International Assurance Company Ltd. and American Life Insurance Co. for initial public offerings, depending on market conditions, the company said. The agreement also will reduce the debt AIG owes FRBNY by $25 billion.
In tandem with these move, AIG announced Alain Karaoglan as senior vice president-divestiture. As head of the company’s divestiture office, Karaoglan will bring AIG’s divesting assets to market and manage the resulting transactions worldwide.
Under the FRBNY agreement, AIG said it will contribute the equity of each of AIA and ALICO to separate special purpose vehicles in exchange for preferred and common interests in the SPVs. The FRBNY will receive preferred interests in the AIA SPV of $16 billion and in the ALICO SPV of $9 billion.
The face value of the preferred interests represents a percentage of the estimated fair market value of AIA and ALICO, the company said. AIG will hold the common interests in the AIA and ALICO SPVs and will benefit from the fair market value of AIA and ALICO above the value of the preferred interests as the SPVs cash in their stakes in these companies in the future.