AIG to Offer Some Shares of Mortgage Insurance Unit to Public

By Leslie Scism 

American International Group Inc. plans to offer shares of its mortgage insurance unit to the public while retaining a large majority interest, according to a person familiar with the matter, a move that signals the insurance conglomerate likely won't satisfy investors who are calling for the company to break into three parts.

Separately, AIG is finalizing a deal to sell its network of broker-dealers, people familiar with the matter said.

The deals are part of a broader effort to slim down, an effort that began when the insurer nearly collapsed into bankruptcy proceedings before receiving one of the biggest bailouts of the financial crisis, since fully repaid. Recently, AIG has come under increasing pressure to take more drastic steps to improve results. Activist Carl Icahn and fellow billionaire investor John Paulson have called for the company to break into three parts.

AIG Chief Executive Peter Hancock has said that while he understands many investors' desire for urgent action to boost the company's overall financial results, a breakup isn't in shareholders' best interests.

Analysts expect the mortgage insurance unit, one of AIG's fastest-growing businesses over the past couple of years, to be valued at between about $5 billion and $7 billion. The broker-dealer sale would total hundreds of millions of dollars, analysts say. AIG has a market value of about $70 billion.

While AIG has been aggressively buying back its shares with the cash it is generating from operations and asset sales, its profitability lags behind big rivals like Travelers Cos.

Mr. Hancock is set to update investors on the company's strategy in a session Tuesday morning, and the two moves are expected to be discussed.

AIG's possible divestiture of the mortgage insurance unit was reported by The Wall Street Journal in October. Reuters reported earlier Friday on the decision to proceed with a partial divestiture.

Write to Leslie Scism at [e-mail]

(END) Dow Jones Newswires

January 22, 2016 18:59 ET (23:59 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.