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AMERICAN INTERNATIONAL GROUP, INC. 8-K Report, Material Agreement (Jul 14, 2021)

Filed July 14, 2021For Securities:AIG

Summary

American International Group, Inc. (AIG) has announced two significant transactions on July 14, 2021, designed to reshape its business and unlock shareholder value. The company entered into a definitive agreement to sell a 9.9% equity interest in its Life & Retirement holding company, SAFG Retirement Services, Inc. (SAFG), to an entity backed by The Blackstone Group Inc. for $2.2 billion. This transaction values AIG's Life & Retirement business at $20.2 billion on a pro forma adjusted book value basis and is a key step in the previously announced separation of this business. In parallel, AIG is selling a portfolio of affordable housing properties to an affiliate of Blackstone Real Estate Income Trust for approximately $5.1 billion in cash. These strategic divestitures indicate AIG's commitment to streamlining its operations and focusing on core areas, which could lead to improved financial performance and a more attractive valuation for investors. The successful completion of these transactions is subject to customary closing conditions, with the Life & Retirement stake sale expected in Q3 2021 and the affordable housing sale by year-end 2021.

Key Highlights

  • 1AIG to sell a 9.9% stake in its Life & Retirement business (SAFG) to Blackstone for $2.2 billion.
  • 2The sale values the Life & Retirement business at $20.2 billion (pro forma adjusted book value).
  • 3This transaction is part of the planned separation of AIG's Life & Retirement segment.
  • 4Blackstone will also provide investment management services to SAFG subsidiaries.
  • 5AIG to sell a portfolio of affordable housing properties to a Blackstone affiliate for approximately $5.1 billion in cash.
  • 6The affordable housing sale is expected to close by December 31, 2021.
  • 7These divestitures signal AIG's strategic focus and efforts to unlock value.

Frequently Asked Questions

These transactions are part of AIG's broader strategy to separate its Life & Retirement business and streamline its operations. By selling stakes in SAFG and the affordable housing portfolio, AIG aims to unlock shareholder value, focus on its core businesses, and potentially improve financial flexibility.

The sale of the 9.9% stake in SAFG is valued at $2.2 billion, implying a total valuation of $20.2 billion for the Life & Retirement business. The affordable housing sale will bring in approximately $5.1 billion in cash. These inflows will strengthen AIG's balance sheet and provide capital for future strategic initiatives.

The closing of the SAFG stake sale is subject to customary conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected in the third quarter of 2021. The affordable housing sale is expected to close by December 31, 2021, with no financing condition or requirement for regulatory approvals, subject to other customary conditions.

Blackstone will not only be a significant equity holder (9.9%) in SAFG but will also provide investment management services for SAFG's subsidiaries through separately managed account agreements. Blackstone will also have the right to designate one board member for SAFG.