NEW YORK - American International Group, Inc. (NYSE: NYSE:AIG) has achieved a significant milestone with the deconsolidation of Corebridge Financial, Inc. (NYSE: CRBG) for accounting purposes. The move comes as AIG relinquishes majority control on Corebridge's Board of Directors, highlighted by the resignation of Chris Schaper, AIG's Executive Vice President and Global Chief Underwriting Officer, from Corebridge's board.
The deconsolidation follows AIG's strategic decision to forgo its right to majority representation on the board, which has been reduced to 12 members. Despite the change, AIG maintains a substantial stake in Corebridge, holding approximately 48.35% of the company's common stock.
Peter Zaffino, Chairman and CEO of AIG, expressed pride in the accomplishment, noting it as the result of carefully planned strategies aimed at positioning AIG for the future as a leading global Property and Casualty insurer. Zaffino will continue in his role as Chairman of the Corebridge Financial Board of Directors.
The separation of the Life & Retirement business has been a key focus for both AIG and Corebridge. The successful initial public offering (IPO) of Corebridge in 2022 was a pivotal event in this process. Since the IPO, Corebridge has forged valuable partnerships with Blackstone (NYSE:BX) and BlackRock (NYSE:BLK) and recently announced that Nippon Life intends to become a strategic investor with an approximate 20% stake in the company, which is expected to foster profitable long-term growth and fortify its position in the industry.
With more than $390 billion in assets under management and administration as of March 31, 2024, Corebridge Financial stands as one of the largest providers of retirement solutions and insurance products in the United States. The deconsolidation marks a new chapter for both AIG and Corebridge as they continue to operate in the global insurance market.
AIG is a global insurance organization, offering solutions to businesses and individuals in approximately 190 countries and jurisdictions. Corebridge Financial specializes in helping people engage with their financial lives through a network of professionals and institutions.
In other recent news, American International Group (AIG) has been making strategic moves to reshape its financial landscape. The global insurance company has been focusing on the monetization of its life insurance stake in Corebridge Financial (CRBG) and implementing cost efficiency programs. Analysts from firms such as Keefe, Bruyette & Woods, Piper Sandler, and Morgan Stanley have been closely monitoring these developments.
AIG's decision to sell down its CRBG stake is expected to streamline operations and potentially lead to significant gains in efficiency. The recent sale of an additional 30 million shares of CRBG has reduced AIG's pro forma ownership to approximately 48.4%. This move aligns with AIG's goal to deconsolidate its financial statements by the third quarter of 2024.
In terms of financial outlook, AIG's earnings per share (EPS) estimates for the second quarter of 2024 are set at $1.88, with a gradual decrease in the following years before an upturn in 2026. The company also aims for a 13% expense reduction, which analysts consider achievable. This aggressive cost-cutting measure is seen as a game-changer by analysts.
Analysts have also maintained their ratings on AIG's stock. BMO Capital Markets has given an Outperform rating with a price target raised to $89.00. Keefe, Bruyette & Woods maintained its Outperform rating and $87.00 price target for AIG shares, while Piper Sandler reaffirmed its Overweight rating with a steady price target of $89.00. Morgan Stanley, on the other hand, maintained its Equalweight rating with a consistent price target of $82.00.
InvestingPro Insights
In the wake of AIG's strategic maneuver to deconsolidate Corebridge Financial, the company's financial metrics and management activities provide investors with a clearer picture of its current position and future outlook. AIG's market capitalization stands at a robust $50.45 billion, signifying its substantial presence in the insurance sector. Additionally, AIG's Price-to-Earnings (P/E) ratio as of the last twelve months leading into Q1 2024 is 10.75, reflecting investor sentiment on the company's earnings potential relative to its share price.
Further adding to the company's appeal, AIG has demonstrated a commitment to enhancing shareholder value, as evidenced by an aggressive share buyback strategy and a noteworthy shareholder yield—an InvestingPro Tip that aligns well with the company's intent to position itself strongly for the future. Moreover, AIG has consistently maintained dividend payments for 12 consecutive years, with the dividend growth in the last twelve months reaching 25.0%, showcasing its dedication to returning value to its shareholders.
While the company has experienced a revenue decline of 4.02% over the last twelve months, the quarterly revenue growth paints a more optimistic picture, with a substantial increase of 15.43% in Q1 2024. This indicates a potential rebound and an ability to adapt to market changes, positioning AIG for possible profitable growth, which has been forecasted by analysts for the current year—an InvestingPro Tip that underscores the company's resilience in a dynamic industry.
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