After ending the first half on a low note, the IPO market is bracing for what could be the biggest public listing of the year. Insurance giant American International Group, Inc. (NYSE: AIG) recently filed papers with the Securities and Exchange Commission for taking its business unit Corebridge Financial public.
The offering, which is expected to fetch a whopping $1.9 billion, would end one of the longest IPO slumps in history. What makes the spinoff significant is that it comes at a time when the economy is going through a crisis. AIG has been pursuing the separation of Corebridge — its life insurance and retirement subsidiary — since 2020.
The Offering
The company will be offering around 80 million shares at an estimated price in the range of $21 and $24. That would value it at $15.5 billion. On completion of the offering, Corebridge’s stock will start trading on the New York Stock Exchange under the ticker symbol CRBG.
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The lead book-runners in the offering are JPMorgan, Morgan Stanley, Bank of America Securities, Citigroup, Piper Sandler, and Goldman Sachs. The proceeds from the offering will go entirely to the selling stockholder.
The Business
Corebridge is a market leader in retirement solutions and insurance products in the US, helping people to plan and achieve secure financial futures. With a large addressable market, it banks on the country’s aging population and growing need for retirement solutions to drive growth. The strong consumer demand for insurance plans bodes well for the company.
The distribution platform includes banks, broker-dealers, general agencies, independent marketing organizations, and independent insurance agents. Last year, Corebridge entered into a strategic partnership with Blackstone, which is expected to bring significant economic and strategic benefits in the long term.
Key Numbers
The company has a strong balance sheet, thanks to the diversified business model and effective risk management practices. In the first six months of the fiscal year, total revenues increased 42% to $15.67 billion. As a result, net income attributable to the company rose sharply to $6.36 billion from $2.81 billion in the corresponding period of 2021.
In the latest regulatory filing, the company also revealed plans to pay quarterly cash dividends of $0.23 per share beginning in the third quarter of 2022, at an initial amount of around $600 million per year.
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Meanwhile, the steady increase in interest rates and unfavorable changes in credit spreads could have a negative effect on the business. The other risks include the recessionary conditions and lingering headwinds from the coronavirus pandemic.
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