American International Group has reduced its holdings in reinsurer Transatlantic Holdings, Inc., to 14 percent netting the New York-based insurer $1.14 billion as it continues to sell off its assets.
New York-based Transatlantic priced the sale of its common stock owned by AIG and the company's subsidiary American Home Assurance Co., at $38 per share.
AIG sold off a total of 29.9 million shares, initially selling 26 million shares with an option to its underwriters to purchase an additional 3.9 million of the company's stock, which they quickly exercised.
The offering was closed on June 10. Under the deal, Transatlantic received none of the proceeds from the secondary 3.9 million share offering.
With the exercise of the option, AIG's ownership stake in Transatlantic dropped from 60 percent to 14 percent.
At the close of the sale, AIG said selling American Home's stake would enable AIU Holdings, Inc., the spin-off of AIG's property-casualty business, "to monetize part of its investment in Transatlantic and improve the quality of its capital and help position AIU Holdings for continued success."
In a separate statement, AIU said its portion of the transaction would amount to $500 million.
The offering is being managed by a syndicate of underwriters including J.P. Morgan Securities Inc., Goldman, Sachs & Co., Morgan Stanley & Co., Lazard Capital Markets LLC, Dowling & Partners and Fox-Pitt Kelton Cochran Caronia Waller.
In a separate action, Moody's Investor Service placed the "Aa3″ insurance financial strength rating of Transatlantic on review for possible downgrade.
Moody's said the move was taken because the company's stand-alone credit profile "is more consistent with a rating in the single-A range."
The rating service said it is concerned with the company's increased exposure to catastrophe risk relative to its capitalization going into this year's hurricane season. Fears of inflation could also hurt profitability, Moody's said.
Transatlantic is an international reinsurer whose subsidiaries include Transatlantic Reinsurance Co., Trans Re Zurich and Putnam Reinsurance Co. It offers reinsurance on both a treaty and facultative basis with an emphasis on specialty risks.
The sale of Transatlantic's stock is part of AIG's process of selling its assets to pay off loans it obtained from the U.S. government after it fell into financial trouble last year. For example, it has recently sold-off several real estate properties including holdings in Japan for $1.2 billion and is also selling its headquarters building in Manhattan.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.