8-KAcquisitions & DispositionsExhibits & Filings

AMERICAN INTERNATIONAL GROUP, INC. 8-K Report, Acquisition Completed (Nov 4, 2010)

Filed November 4, 2010For Securities:AIG

Summary

American International Group, Inc. (AIG) has filed an 8-K report detailing two significant divestitures. On October 29, 2010, AIG completed the initial public offering (IPO) of AIA Group Limited (AIA), selling 8.08 billion shares for approximately $20.51 billion. Following the IPO, AIG retains a 33% stake in AIA and will deconsolidate AIA from its financial statements in the fourth quarter of 2010. However, AIG is restricted from selling its remaining AIA shares until October 2011 and April 2012. Furthermore, on November 1, 2010, AIG completed the sale of American Life Insurance Company (ALICO) and Delaware American Life Insurance Company. The total consideration received was approximately $16.2 billion, including $7.2 billion in net cash, a significant stake in MetLife, Inc. common and preferred stock, and MetLife equity units. AIG plans to monetize these MetLife securities over time, subject to market conditions and holding periods. This report also includes pro forma financial statements reflecting these transactions.

Key Highlights

  • 1AIG completed the IPO of AIA Group Limited on October 29, 2010, generating gross proceeds of approximately $20.51 billion.
  • 2AIG will deconsolidate AIA in Q4 2010 due to its reduced ownership stake (33%), though it faces restrictions on selling remaining shares until October 2011 and April 2012.
  • 3The fair value of AIG's retained interest in AIA was approximately $11.8 billion as of October 29, 2010.
  • 4AIG sold ALICO and Delaware American Life Insurance Company on November 1, 2010, receiving approximately $16.2 billion in total consideration.
  • 5The consideration for the ALICO sale includes $7.2 billion in net cash, MetLife common stock, convertible preferred stock, and equity units with an aggregate stated value of $3.0 billion.
  • 6AIG intends to monetize the received MetLife securities over time, subject to market conditions and holding period restrictions.
  • 7Pro forma financial statements reflecting the AIA IPO and ALICO sale are attached as exhibits.

Frequently Asked Questions

The AIA IPO generated significant proceeds for AIG, approximately $20.51 billion, and will lead to the deconsolidation of AIA from AIG's financial statements in the fourth quarter of 2010. While AIG retains a substantial stake (33%), its ability to sell these shares is restricted for a period, impacting its immediate liquidity from this asset.

AIG received approximately $7.2 billion in net cash consideration from the sale of ALICO and Delaware American Life Insurance Company, after accounting for an upward purchase price adjustment.

AIG received 78,239,712 shares of MetLife common stock, 6,857,000 shares of convertible preferred stock, and 40,000,000 equity units of MetLife with a stated value of $3.0 billion. The preferred stock is convertible into common stock, and the equity units are complex instruments involving debt securities and stock purchase contracts.

AIG is precluded from selling any of its remaining AIA shares until October 18, 2011, and more than half until April 18, 2012. For the MetLife securities, AIG intends to monetize them over time, subject to market conditions and 'agreed-upon minimum holding periods'.