In its efforts to repay the Treasury bailout money, the US insurance giant American International Group Inc (AIG) is planning an initial public offering (IPO) of its Asian unit, American International Assurance Co (AIA Group) by spinning it off in to a separate entity.
However, the company has not revealed the name of the exchange or the size of the offering.
''Those details will be based on market conditions and regulatory approval,'' the company said, adding only that it would accelerate steps to make AIA, an independent entity and also seek IPO on an Asian stock exchange.
Speculations are rife that the Australia-based unit will be listed on the Hong Kong Stock Exchange.
Despite the financial turmoil of the parent, the Asian business is viewed by industry rivals as AIG's crown jewel.
"At this stage, we believe that a public listing for AIA would be in the best interests of all stakeholders, including US taxpayers, policyholders, employees and distribution partners," AIG chairman and chief executive Edward Liddy said in a statement.
Commenting on the latest move, AIA Group's president and CEO Mark Wilson said, "We now have clarity on AIA's structure and future.''
''AIA is a leading company in Asia with more than 20 million customers, 250,000 agents, assets of more than $60 billion and a broad network of distribution partners, as well as a deep heritage and strong brand presence in Asia," Wilson added.
Last week, Dow Jones Newswires reported that AIG was planning to raise between $5 billion to $10 billion through a sale of between one-quarter and one-third of AIA Group.
Since September 2008, AIG has received about $180 billion in Treasury loan, which gave the US government about 80 per cent stake in the firm.
On Wednesday, Liddy told Congress that the insurer was making progress toward repaying the loans through asset sales and did not foresee needing more government support.
Last week Indian financial services firm Religare Enterprises is reported to have bid for the investment management arm of AIG. (See: Religare in race for AIG's fund management unit).
AIG had earlier announced plans to sell its Japanese headquarters to Nippon Life Insurance Co. for $1.2 billion in cash. The transaction is expected to close in the second quarter.
Last month AIG sold its car insurance unit, 21st Century Insurance, to Zurich Financial Services Group for $1.9 billion. (See: AIG sells off auto unit for $1.9 billion).
The transaction is the largest divestiture by AIG since September, and is one of 11 asset sale agreements it has reached in the past few months. (See: Munich Re to buy AIG unit for a bargain price of $742 million / Chinese consortium in talks to buy AIG's Asian assets)
According to BusinessDaily several global insurers had expressed interest in acquiring the Asian life network through a trade sale.
Britain's Prudential PLC is viewed as a potential frontrunner to buy the business, while Aviva PLC is also believed to be interested.
Prudential has a broad distribution network throughout Asia, but it exited the Australian market in 1997 when it sold its local wealth management operations to Colonial Ltd for $1.2 billion.
The AIA Group has branch offices, subsidiaries and affiliates located in jurisdictions including Australia, Brunei, China, Hong Kong, India, Indonesia, Macau, Malaysia, New Zealand, Singapore, South Korea, Thailand and Vietnam.