Analyst Note| Brett Horn, CFA |
No-moat AIG announced a deal with Blackstone that looks like a further step in spinning off its life insurance operations. Blackstone will purchase a 9.9% stake in the life insurance business for $2.2 billion. This price implies a valuation slightly above book value, which seems reasonable to us. Additionally, Blackstone will manage $50 billion of the existing life insurance investment portfolio, with this figure to almost double to $92.5 billion over the next six years. Finally, Blackstone will acquire AIG’s affordable housing investment portfolio for about $5.1 billion. We like AIG’s decision to separate its P&C and life operations and are pleased to see the company making progress. We will maintain our $60 fair value estimate.