AIG Sells 3.9 Million Transatlantic Holdings Shares to Underwriters

Strategic Insights -

Underwriters have exercised their option to purchase 3.9 million shares of Transatlantic Holdings Inc. common stock owned by American International Group Inc. and a subsidiary, American Home Assurance Co. As a result, the public offering of Transatlantic stock will now total 29.9 million shares. American Home Assurance Co. will retain 9.2 million shares, approximately 13.9% of the total outstanding shares. The option has increased the value of the sale to $1.14 billion, with AIG setting a $38-per-share price for the offering.

Key Takeaways:

  • AIG has exercised its option to sell 3.9 million shares of Transatlantic Holdings Inc. common stock to underwriters, increasing the total public offering to 29.9 million shares.
  • American Home Assurance Co. will retain 9.2 million shares, approximately 13.9% of the total outstanding shares.
  • The sale has increased in value to $1.14 billion, with AIG setting a $38-per-share price for the offering.
  • AIG currently holds a total of 39 million shares, or 59%, of Transatlantic Holdings Inc.
  • AIG is selling assets to repay federal aid as part of its restructuring under the federal rescue program, which has provided up to $182.5 billion in loans and other assistance since September 2008.
  • The sale is led by J.P. Morgan Securities Inc., Goldman, Sachs & Co., and Morgan Stanley & Co., with Lazard Capital Markets LLC as co-lead underwriter.
  • Transatlantic Holdings is the ninth-largest global reinsurer based on consolidated gross written premiums in 2007, according to A.M. Best Co. data.
  • Most AIG insurance companies currently have a Best's Financial Strength Rating of A (Excellent) with a negative outlook.

Statistics:

  • Value of the sale: $1.14 billion
  • Number of shares sold: 3.9 million
  • Total public offering: 29.9 million shares
  • Percentage of shares retained by American Home Assurance Co.: 13.9%
  • Total shares held by AIG: 39 million (59% of Transatlantic Holdings Inc.)
  • Federal aid provided to AIG: up to $182.5 billion
  • Net loss in morning trading on June 8, 2009: 2.3% for AIG, 1.4% for Transatlantic Holdings Inc.

Sources:

  • A. M. Best via COMTEX
  • Comtex SmarTrend Alert