AIG returns to offload more Corebridge stock
American International Group made yet another dent in its still large Corebridge Financial holding by selling a 5% stake via a US$876m block sale late on Thursday.
Sole bookrunner Morgan Stanley reoffered its purchase from AIG of 30m shares in the life insurance and annuities provider at US$29.20, the bottom of the US$29.20–$29.64 marketing range and a 1.5% discount to Thursday’s closing price of US$29.64.
The block, the fourth selldown since AIG took Corebridge public on the NYSE at US$21 per share in September 2022, pares the exiting former parent's stake to 48.4% from 53.3%, and to 47.6% assuming exercise of the greenshoe.
AIG's holding will fall sharply early next year when it closes a deal struck recently to sell 120m shares or 20% of Corebridge for US$3.8bn to Japan’s Nippon Life.
The terms of Thursday's block sale were negotiated directly between Morgan Stanley and AIG, rather than subject to a competitive auction with other banks. The offering was oversubscribed, a banker said.
Early in Friday's session, Corebridge shares were trading broadly in line with the reoffer price, leaving the stock up by about a third so far in 2024.
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The latest sale came a day after AIG CEO Peter Zaffino told investors at a conference he was not constrained in selling more Corebridge shares before the Nippon Life sale closed.
Zaffino also said AIG would not deconsolidate Corebridge until the stake fell below 47%.
Deconsolidation would make AIG, which has already narrowed its focus to P&C insurance following its slow-motion breakup following its financial crisis-era bailout in 2008, a simpler business for investors to understand, analysts say.
“We've got to go below 47% to deconsolidate,” Zaffino told the Sanford C Bernstein conference. “So whatever trade we do, that's the math. I mean, so if we did a 10% block in the next week, then we would deconsolidate irrespective of what happened with Nippon Life and then we will continue to do consecutive selldowns after that.”
Once a 30-day lockup on the latest sale expires, AIG will therefore be to free to sell more Corebridge shares.
However, it has agreed to hold at least 9.9% of Corebridge for two years after the Nippon Life sale closes.
In effect, this means AIG could part with as many as 110m shares later this year and early next year through further selldowns while meeting its commitment to Nippon Life.
Nippon Life is paying US$31.47 per share for its stake, US$2.27 per share more than AIG's latest sale price and also well above the levels at which AIG has cut its stake on three previous occasions since Corebridge’s IPO.
The last selldown in December (a 35m-share block via JP Morgan) priced at US$20.35. AIG also sold about US$1bn of shares at just US$16.25 in a follow-on in June last year.
Deutsche Bank analyst Cave Montazeri wrote earlier this month that AIG could also opt for a share exchange that would fit with the capital return focus that has helped propel AIG’s own stock price nearly 50% higher in the past 12 months.
“The main advantage of a share exchange is the immediate reduction in [AIG’s] share count. The drawback is the execution risk given the 20-day window needed to market the exchange offer."