NU Online News Service, Aug. 1, 12:45 p.m.EDT

American International Group is buying the Hartford'sbroker-dealer arm, Woodbury Financial Services, Inc.

According to analysts at Sandler O'Neill in Chicago, there aretwo keys to the transaction.

First, it will add to AIG's SunAmerica Financial Group's AdvisorGroup, which is one of the nation's largest networks of independentbroker-dealers.

Second, “It is a sign of AIG's improved financial position thatthe company can consider acquisitions as part of its strategy.”

Analysts estimate that the deal could generate as much as $115million in proceeds, with up to $90 million coming from AIG and $25million coming from Woodbury in the form of a dividend.

The purchase price could be revised downward if Woodbury fallsshort of certain revenue targets before the deal closes.

The agreement is expected to close by the end of 2012, subjectto regulatory approval and other customary closing conditions,according to Liam E. McGee, the Hartford's chairman, president andCEO.

Paul Newsome, managing director of Sandler O'Neill's insuranceanalysis group, says the Federal Reserve Bank of New York did nothave to approve the transaction because its oversight of AIG endedonce the Treasury Department acquired the N.Y. Fed's stock interestin AIG, and AIG and the N.Y. Fed managed to close out the specialpurpose vehicles created to provide some cash for AIG.

He also said it was a “good sign” that the Treasury Departmentconsidered it another sign that the acquisition was in the bestinterest of AIG and its shareholders, with the government owningapproximately two-thirds of AIG”s common stock.

“If Treasury didn't think this was a good decision, it couldhave told them not to do it,” Newsome said.

John Barnidge, a vice president at Sandler O'Neill, cautionsthat a “pushback” to the acquisition may be that the company isusing capital that could have otherwise been utilized to acceleratethe government's ownership exit.”

Barnidge adds, “That being said, the acquisition is small innature by AIG standards and probably fits very well within itsexisting broker-dealer units.”

Woodbury's approximately 1,400 advisors complements AIG'sAdvisor Group's network, which includes more than 4,800 independentfinancial advisors at SagePoint Financial, Royal AllianceAssociates and FSC Securities Corporation. Patrick McEvoy willcontinue to serve as Woodbury's president and CEO, and will reportto Larry Roth, president and CEO of Advisor Group.

Roth noted the importance of the acquisition, stating, “AddingWoodbury Financial to our Advisor Group network sends a clearmessage that we are absolutely committed to the independentfinancial advisor business model. We will continue to investin our advisors to help them grow their practices and better servetheir clients.”

Jay Wintrob, president and CEO of SunAmerica Financial Group,added that, “Woodbury Financial Services is a strong broker-dealer,with very talented independent financial advisors and a dedicatedhome office team.”

Wintrob said that, “I am confident that when WoodburyFinancial's advisors join our network they will see tremendousbenefits, namely our industry-leading technology and openarchitecture platform.”

The Hartford placed Woodbury for sale as part of its decision todivest itself of life insurance operations in order to concentrateon property and casualty-related businesses.

Woodbury is based in Woodbury, Minn., and dates back to 1910. Ithad more than $230 million in revenue in 2010, according to severalsources.

It sells annuities, life insurance, mutual funds, collegesavings plans unit investment trusts and alternative investments aspart of financial planning by the middle-class and wealthy, as wellas seniors.