(Bloomberg) — John Paulson, the billionaire whose proposal to split American International Group Inc. into three companies was rebuffed by Chief Executive Officer Peter Hancock, would also support an alternative plan for the insurer to sell units, according to people familiar with his hedge-fund firm’s thinking.
Individual sales of subsidiaries could create more value than the spinoff off the entire life insurancebusiness, said the people, who asked not to be identified discussing internal deliberations at the hedge-fund firm. The goal of the plan would be to focus AIG on property-and-casualty insurance.
Activist investor Carl Icahn cited Paulson in an October letter urging Hancock to split the insurer into separate companies focusing on life, P&C and mortgage coverage. Asset sales might be more palatable to Hancock, who has said the three-way break-up would be impractical.
“The market for insurance mergers and acquisitions is red- hot,” Josh Stirling, an analyst at Sanford C. Bernstein & Co., said in a note to clients Monday. “Many investors are increasingly turning to a simpler approach as AIG’s answer: pursuing an enthusiastic course to choose the simpler path of selling its businesses outright to de-conglomerate the firm.”
Hancock has sought to simplify the company since becoming CEO last year, and has sold some units in locations including Taiwan and Central America. While he has said there is a “tremendous benefit” to keeping life and P&C at the same company, the CEO has told analysts he’s open to further asset sales.
Jennifer Hendricks Sullivan, a spokeswoman for New York- based AIG, declined to comment. Icahn didn’t immediately respond to a message.
Paulson’s firm believes the asset-sale plan would value AIG more than its $75 billion market capitalization as of Monday’s trading close, the people said. AIG jumped 1 percent to $61.26 at 10:48 a.m. in New York, the biggest increase in the 21- company Standard and Poor’s 500 Insurance Index.