AIG: Selling a 20% Stake in Corebridge

American International Group announced that it has reached an agreement to sell a 20% stake in Corebridge, its life insurance operations, to Nippon Life. The aggregate price will be $3.8 billion, in line with the current market price for Corebridge’s shares. AIG had previously said that it expected to reduce its ownership to a point where it could deconsolidate the life segment in 2024, but this transaction is not expected to close until the first quarter of 2025, so possibly further share sales will be completed this year. Including this sale, AIG would hold a little over a 30% stake in Corebridge. We would like to see AIG deconsolidate Corebridge as quickly as possible in order to simplify the company’s reporting and increase transparency. While we are encouraged by the sale, one of the terms of the deal is that AIG will maintain a 9.9% stake in Corebridge for at least two years. We would like to see AIG fully divest from Corebridge and see this commitment as a negative. We will maintain our $72 fair value estimate for the no-moat company and see the shares as modestly overvalued.