American International Group has made the decision to look into a spin-off of that branch of its business.
American International Group (AIG) is now in the midst of the pursuit of a spin-off of its existing mortgage insurance business, according to several reports based on sources who are familiar with the matter.
This new strategy from the insurance company could come at precisely the time that goes up against Carl Icahn.
Despite the attempts that the company is seeking to make to spin-off its mortgage insurance business – which made up 7.4 percent of the pre-tax operating income that AIG earned during the first three quarters of last year – it is very unlikely that this will be adequate for appeasing activist Icahn. Icahn has already been calling for the insurance company to split itself into three unique businesses.
During the first nine months of 2015, the mortgage insurance business at AIG brought in $791 million.
It is expected that AIG will be talking about the future of that insurance business later today, at the same time that it will be sharing its strategic plan. The sources quoted by the various news media outlets that have been keeping up on this topic have indicated that AIG would, more specifically, be looking into a partial spin-off of their mortgage coverage business. What this would mean for shareholders with the company is that they would be receiving only some of the spun-out company’s shares. The rest would stay with AIG.
Today, it is also believed that the insurance company will be providing investors with an awaited update on the sale of the Advisor Group. The sources quoted by the media have warned that the details are being hammered out right up until the last minute, so any predictions should be considered to be just that, and are not set in stone quite yet. The sources requested that their identities remain anonymous as the company’s deliberations remain confidential.
An emailed statement from AIG, with regards to its mortgage insurance business, said that “AIG continues to take steps to narrow its focus, improve its financial performance, and return capital to shareholders. AIG maintains an active dialogue with shareholders, including Carl Icahn.”