AIG is full speed ahead with IPO plans for part of its Life & Retirement division and hopes to pull the trigger by the end of 2021, President and CEO Peter Zaffino said.
Those plans have a few caveats, however.
“The ultimate timing of completing this step will depend on a number of factors – some out of our control [such as] regulatory and market conditions,” Zaffino said during American International Group’s Q1 2021 earnings call on May 7.
He said the working timeline remains the end of 2021, but it could slip to early 2022 if those obstacles come into play.
AIG announced last November that it would separate its Life & Retirement division into a standalone company either through an initial public offering or a private sale of the unit, in stages over time.
With a course of action chosen, Zaffino said that the company “continues to work diligently and with a sense of urgency toward an IPO, of up to 19.9 percent of the business.”
AIG has also prepared standalone audited financials for Life & Retirement and brought in an independent party to conduct “a thorough actuarial review,” Zaffino said. The process has been positive so far.
“No concerns have been raised about the Life & Retirement portfolio as a result of this work,” Zaffino said.
AIG’s CEO reiterated that the company has gotten “a number of credible inquiries from parties interested in purchasing a minority stake.” AIG considered those offers thoroughly, he said, adding that the IPO option continues to be preferable.
“At this time, we believe an IPO remains an optimal path forward to maximize value for our stakeholders, and to position the business for additional value creation as a standalone company,” Zaffino said. “In addition, an IPO allows AIG to retain maximum flexibility regarding the operations of the business as well as the separation process.”
AIG in March hired former Lincoln Financial executive Lisa Buckingham to help separate its Life & Retirement business into a standalone company and guide other streamlining effort. She officially started in April, in a newly created position – Executive Vice President, Global Head of AIG Enterprise Design and Life & Retirement Separation Initiatives. Previously, she was Lincoln’s EVP and Chief People, Place and Brand Officer.
Amazon and AIG 200
Zaffino also said the insurer’s massive AIG 200 initiative has made progress – a plan to invest $1.3 billion over the next three years in order to revamp and improve core processes, technology infrastructure and services.
“Recent progress on IT modernization has enabled us to reach the halfway point for $500 million of our run rate savings target,” Zaffino said.
Among advances in the program – the company negotiated a multi-year agreement with Amazon Web Services “to execute on an accelerated cloud strategy, which is a significant step forward in modernizing our infrastructure.”
Additionally, Zaffino said, the company is making progress with its Japan operations, whose new leader is helping to “finalize target outcomes as we modernize this business by developing digital product capabilities with agile product capabilities.”