The indebted US insurer has moved both Alico and its Asian insurance arm AIA into special purpose vehicles with the New York Federal Reserve Bank. The insurer hopes these will be sold, with the proceeds going towards paying down its £25bn ($42bn) debt with the Federal Reserve.
AIG, which is 80 per cent state-owned, hopes the move will result in the sale of both vehicles for £15bn ($26bn), reducing its debt to the Fed to £10.2bn ($17bn).
Alico chairman and chief executive Rodney O. Martin, Jr says: “This action underscores Alico’s move toward independence and complements the substantial progress we have achieved this year in repositioning Alico and reinvigorating the brand in all markets.”
Both AIA and Alico transactions involve AIG contributing the equity of each of AIA and ALICO to the SPVs in exchange for interests in them. Under the terms of the transactions, the Fed receives preferred interests with a liquidation preference in the Alico SPV of £5.4bn ($9bn) and £9.6bn ($16bn) in the AIA SPV.
It is understood that a number of firms, including Metlife, have considered bids for Alico. Initial reports suggested Metlife had bid around £6.9bn but AIG was understood to have wanted a figure closer to £12bn.
Martin says: “Securing the value of this well-capitalised global insurer is in the best interests of policyholders, distribution partners, and the American taxpayer. We are very excited to begin this new chapter in the life of one of the world’s leading international life insurance companies.”