BlackRock wins massive investment mandate for insurer AIG – Financial Times

US insurer AIG has filed for a long-expected initial public offering of its life and asset management business that could value the unit, to be called Corebridge Financial, at more than $20bn.

The company, which will have $410bn in assets under management, is by far the largest to publicly file for a US IPO so far this year. Market volatility caused by concerns about rising interest rates and the war in Ukraine led many candidates to put their plans on hold. Companies have raised just $2.4bn in US listings this year, the slowest quarter since early 2016.

AIG’s split was first promised in 2020 as part of a plan to revive its flagging fortunes. The company is the only big US insurer to combine life with property and casualty units, impeding comparisons with peers.

The life and asset management business is known as SAFG, but AIG said it would be rebranded as Corebridge after the IPO. It sells individual and group retirement saving products as well as life insurance.

“As Corebridge, we will continue to proudly partner with financial and retirement professionals to help their clients feel confident and motivated today, and in control of their tomorrow,” said Kevin Hogan, chief executive of AIG’s life and retirement business.

The S-1 registration statement filed on Monday did not give a value for Corebridge, but people familiar with the process gave a figure of about $20bn. This is consistent with the $2.2bn that Blackstone paid in November for a nearly 10 per cent stake in SAFG. Lead bankers JPMorgan Chase declined to comment.

AIG has been undergoing bouts of restructuring since its $185bn taxpayer rescue during the 2008 financial crisis, selling off assets in areas such as aircraft leasing and consumer finance.

Between 2015 and 2017, it fought off pressure from activist investors Carl Icahn and John Paulson to separate its general insurance and life businesses. But management changed their mind a few years later.

The move comes amid a broader rethink in the sector of the old conglomerate model, with insurers such as London and Hong Kong-listed Prudential choosing to break up sprawling groups into local units.

Hours before filing the S-1, AIG announced plans to hand over management of up to $150bn of fixed income and private placement assets to BlackRock, in one of the largest such mandates of its kind. Some $90bn of the assets will become part of Corebridge’s portfolio and $60bn is within AIG’s core business.

More and more pension funds, endowments and insurers are turning to these types of arrangements, often dubbed “outsourced chief investment officer” deals. They allow the asset owners to tap outside investing expertise and potentially cut costs by handling over regulatory and operating responsibilities to a larger fund manager such as BlackRock.

As of March last year, nearly $2.5tn in assets were being managed under OCIO arrangements, up 22 per cent year on year, according to an annual industry survey by Pensions & Investments.

AIG previously agreed to hand off management of up to $92bn in life and retirement assets to Blackstone, at the time the latter took its stake in SAFG.

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BlackRock, the world’s largest asset manager with assets under management of $10tn at end of 2021, was fourth last year in terms of fully discretionary assets managed through such outsourced CIO arrangements and it has been expanding its reach into the area.

The group last year took over management of more than £21.5bn in pension assets from British Airways, and Gary Shedlin, BlackRock chief financial officer, predicted at a December conference that more large deals would be coming. “You’re starting to see some and . . . we’re talking $50bn mandates. We are really uniquely positioned to be able to leverage the entire firm,” he said.

The AIG-BlackRock arrangement will be phased in gradually and is subject to regulatory approvals. Both Corebridge and the rest of AIG will use BlackRock’s investment management technology, known as Aladdin.

“BlackRock is honoured to have been selected to serve AIG as a strategic partner. We look forward to leveraging our investment expertise, scale, and technology capabilities for the benefit of all of AIG’s stakeholders,” Rob Kapito, BlackRock president, said in the deal announcement.