Analyst Note| Brett Horn, CFA |
American International Group, or AIG, announced that it will launch the initial IPO of its life insurance operations, which will be dubbed Corebridge Financial. The company will offer shares equivalent to a 12% stake in the business at a range of $21 to $24 per share. That price reflects a discount to adjusted book value and is lower than the value AIG received when it sold a 10% stake to Blackstone in 2021. However, we think this simply reflects weaker capital market conditions this year, and we are pleased to see the company accept the situation and begin this process. We don’t believe a separation will necessarily unlock material shareholder value, but we do believe that allowing management to completely focus on the turnaround in the P&C business would be a positive. Further, we see no material strategic benefit from combining P&C and life operations, and eliminating any noise from the life side of the business will provide a clearer look at the improvement AIG is seeing on the P&C side. We will maintain our $65 fair value estimate and no-moat rating.