AIG's Asian Operations Restructure, May Go Public

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March 5, 2009 Thursday 10:31 AM EST

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AIG's Asian Operations Restructure, May Go Public

Rebecca Ng

HONG KONG



American International Assurance Co. Ltd said it has already completed legal restructuring of its operations in the Asia-Pacific region and formed the AIA group, claiming that it "may ultimately conduct an initial public offering of shares" with available market conditions in the future.

According to AIA, its various entities in the region completed legal restructuring on Feb. 28. The newly formed AIA group "is financially strong with a combined solvency ratio on a pro forma basis of over 200% of regulatory requirements at Nov. 30, 2008."

AIA, the Asian life unit of the credit-troubled American International Group Inc. [58702], said its current assets are "more than $60US billion." It also declared it achieved "solid operating results" despite the difficult economic environment.

Following AIG's announcement on March 2 saying the shares of AIA will be put into a specially created separate legal entity subject to relevant regulatory approvals, AIA said, this special entity, which will issue common interests to be owned by AIG and preferred interests to be owned by the Federal Reserve Bank of New York, has been created in part to "allow AIA to be positioned as an independent operation."

AIA's president, Mark Wilson, said the planned separation of AIA from AIG represents "a major step forward for AIA and will reinforce our position as a leading company in Asia." Wilson claimed the separation "seems to have been well received."

He also said this structure "provides increased clarity for customers, staff, agents, regulators and all stakeholders."

Having planned to separate from the U.S.-based AIG, Hong Kong-based AIA said it will continue to review strategic options, which "ultimately may include an initial public offering of shares, depending on market conditions," in a company statement.

According to Wilson, "AIA has thrived and grown with Asia." With the company's 90-year operations and strong track record in the region, Wilson said, "we remain committed to our growth strategies and are building future success through investing in strategic growth projects," which will also enable the company to generate "long-term value and deliver improved service standards."

"The strength of AIA's reputation around the Asian region continues to be a key source of our resilience and solid performance," added Wilson.

Apart from Hong Kong, AIA Malaysia also confirmed that its policyholder funds "continue to be protected by the regulatory safeguards in each of the countries where the company operates."

Khor Hock Seng, chief executive officer of the Kuala Lumpur-based AIA Malaysia, said in a statement that the separation of the AIA group from AIG would "symbolize our homecoming to our Asian roots and our future as a strong Asian business."

Khor added, the company has recorded strong growth during its history and a clear strategy to expand actively across Asia. "Our roots are in Asia, as we were founded in Shanghai in 1919, and we remain fully committed to the region," said the CEO.
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Currently, AIA has 250,000 agents and 20,000 employees across 13 geographical markets, including Australia, Brunei, China, Hong Kong, India, Indonesia, Macau, Malaysia, New Zealand, Singapore, South Korea, Thailand and Vietnam, serving more than 20 million customers in the region. Its products and services include life insurance, retirement planning, accident and health insurance, as well as wealth management solutions across the region.

(By Rebecca Ng, Hong Kong news editor: Rebecca.Ng@ambest.com)

March 6, 2009

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