"AIG May Raise $988 Million Selling Part of Transatlantic Stake
AIG offered 26 million shares at $38 each, according to a statement released yesterday. The New York-based insurer held about 39 million shares, or 59 percent of Transatlantic, before the sale. The stake will be less than 20 percent after the sale, AIG said last week.
AIG was forced to scale back plans to sell units in their entirety as the recession eroded the value of insurance assets and made financing costlier for potential buyers. The company, which is seeking to repay loans within a government bailout valued at $182.5 billion, has disclosed deals for $5.6 billion and said in March it will place its two biggest non-U.S. life insurers into trusts for eventual public offerings or sales.
AIG’s plan to reduce its stake was a “very positive event” for Transatlantic, said Steven Skalicky, the chief financial officer of the reinsurer, in a May 28 interview. Mutual funds that previously shunned the stock because of AIG’s ownership may now be willing to buy shares, he said.
Transatlantic is the second-largest U.S.-based reinsurer behind Warren Buffett’s Berkshire Hathaway Inc. The New York- based reinsurer’s first-quarter net income fell 35 percent to $75.2 million on the declining value of investments, Transatlantic said in April.
Transatlantic was incorporated in 1986 and listed on the stock market in a 1990 initial public offering. The reinsurer sells coverage of property, corporate boards, medical malpractice, auto liability and aviation, according to a regulatory filing.
JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley were leading the sale of shares. Underwriters have the option of buying as many as 3.9 million additional shares.
AIG, which reported a $99.3 billion loss last year, has been unprofitable for six straight quarters on bad bets tied to subprime mortgages.