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Johannesburg - American International Group (AIG) announced last week that it will accelerate steps to position AIU Holdings as an independent profitable entity, separate from AIG.
AIU Holdings, which includes AIG South Africa, Kenya and Uganda, will incorporate an independent board of directors, management team and brand distinct from AIG. The AIU companies have historically maintained a consistent track record of profitable operations, operating in 130 jurisdictions, with $32.1bn in gross premium and $38.1bn in equity.
AIU Holdings will be transferred to a special purpose vehicle (SPV) in preparation for the potential sale of a minority stake in the business. This may ultimately include a public offering of shares depending on market conditions.
AIG intends to contribute the equity of AIU Holdings into the SPV in exchange for preferred and common interests in the SPV.
"This restructuring plan for AIU Holdings will further position our operations to best serve our clients and maximise our value to stakeholders", noted Peter Flint, President and CEO of AIG Africa.
"The step will enable our already financially strong African operations to be established as independent businesses."
Standard & Poors views these transactions "as a positive development in materially bolstered capital adequacy and enhanced quality of capital." This is commensurate with the ratings on AIU's core commercial insurance group and foreign general property /casualty subsidiaries.
New Jersey based rating agency, AM Best, said the restructuring is a positive move. The financial strength rating of "A (Excellent)" and issuer credit ratings of "a" are unchanged for the property-casualty companies involved in the spin-off.
- I-Net Bridge
