AIG Sells Commodity Index Business For $150M

NU Online News Service, May 7, 1:59 p.m. EDT

American International Group said its AIG Financial Products Corp. has sold its commodity index business to UBS Investment Bank for $150 million, based on future earnings.

The New York-based insurer said its sale of the commodity index business to the UBS equities business includes the rights to the Dow Jones-AIG Commodity Index (DJ-AIGCI).

The commodity index, which is comprised of commodity index swaps and funded notes based on the benchmark DJ-AIGCI, will be renamed Dow Jones-UBS Commodity Indexes, UBS said.

UBS said the deal closed on May 6. It will pay $15 million at the time of closing plus payments of up to $135 million over the following 18 months based on future earning of the purchased business.

According to AIG, approximately 13 AIG employees from the unit involved with the commodity index business will join UBS Investment Bank in connection with the sale.

"With this sale, AIG has realized value from the sale of a profitable business unit of AIGFP in connection with the ongoing unwind of AIGFP's businesses and portfolios," Gerry Pasciucco, AIG-FP chief operating officer said in a statement.

"This acquisition allows us to expand our leading equities business in commodities indexes by adding a highly regarded platform, which has considerable market traction, expertise, and critical mass," Jason Barron, Global Head of Equity Derivatives for UBS said in a separate statement. "The DJ-AIGCI is one of the most utilized indexes and is a strategic fit with our existing commodity index, the UBS Bloomberg Constant Maturity Commodity Index."

He added, "We are pleased to add a valuable product offering to our core capabilities. Our clients now have a wide variety of choices in accessing commodity indexes."

AIG said AIG-FP began the process of unwinding its businesses and portfolios late last year.