Posted on 19 Jul 2010
Not long ago, Robert Benmosche was determined to secure a buyer for the largest overseas life-insurance business of American International Group Inc. Now that the unit is instead headed for an initial public offering this fall, the AIG chief executive isn't wasting any time.
Just days after a boardroom drama at AIG's New York headquarters led to the resignation and replacement of the government-controlled insurer's outside chairman last week, Mr. Benmosche got on a plane to Hong Kong to clarify the leadership and direction of AIA Group Ltd., the pan-Asian life insurer that AIG must sell to help repay U.S. taxpayers.
Early Monday, AIG named Mark Tucker, a former chief executive of British insurer Prudential PLC, executive chairman and chief executive of AIA. Mr. Tucker, a 52-year-old U.K. citizen, will succeed AIA Chief Executive Mark Wilson, who didn't see eye to eye with Mr. Benmosche over plans for AIA, according to people familiar with the matter. The company said Mr. Wilson, who has been CEO since 2009, will stay at the company through the end of this year to help with the leadership transition.
AIG hopes to raise about $23 billion from share sales of AIA to strategic investors and to the public in a Hong Kong stock offering by late October or early November, the people said. The money will go to the Federal Reserve Bank of New York, which holds a stake in AIA and has been AIG's top creditor since a federal bailout of the insurer in 2008 that has since soaked up more than $130 billion in taxpayer funds.
Mr. Tucker, an insurance-industry veteran, helped build Prudential's Asian franchise in the 1990s and was chief executive of the U.K. company from early 2005 until September 2009. He has spent 15 years in Asia and previously lived and worked in Hong Kong, where AIA is based. Most recently, he has been a nonexecutive director at the Bank of England, the U.K.'s central bank.
Mr. Tucker was approached by Mr. Benmosche about the AIA top job about two and a half weeks ago, after Mr. Benmosche conferred with AIG's board about changing the top leadership at AIA while keeping the IPO on schedule, according to people familiar with the matter. One reason Mr. Tucker was seen as attractive for the job was his experience running a large public insurance company, the people said.
Prudential PLC, which is unrelated to Prudential Financial Inc. of the U.S., last month terminated a deal to buy all of AIA for $35.5 billion after its shareholders balked at the price. That failed deal was led by Prudential Chief Executive Tidjane Thiam, who succeeded Mr. Tucker in the top job at Prudential after he left the firm. Prudential had expressed interest in AIA as far back as late 2008, when AIG considered selling off some assets right after its bailout, though those initial talks fizzled out in early 2009.
AIG needs to file a listing prospectus for AIA by September to launch an IPO of the unit by late October or early November. Advisers to the company have told AIG that it should be able to raise $12 billion to $15 billion from the AIA IPO and another $5 billion to $8 billion from stake sales to strategic investors, a person familiar with the matter said.
After the company is listed, AIG likely will end up with a minority stake in AIA, assuming the company is valued at more than $35 billion when it goes public. It still is possible that a buyer for the whole of AIA emerges in coming months, but AIG and its government overseers are hoping the tight IPO schedule will motivate any potential buyers to come forward quickly with secure financing, according to people familiar with the matter.
The move to make Mr. Tucker both executive chairman and chief executive differs from earlier plans for an independent AIA, which had envisioned Edmund Tse, former longtime leader of AIA, becoming the nonexecutive chairman of AIA's board, according to people familiar with the matter.
Mr. Tucker's appointment is subject to approval by insurance regulators in Hong Kong, which AIG expects to secure shortly. AIA also needs to hire a chief financial officer and plans to name one within the next two weeks, people familiar with the matter said. Mr. Tucker and AIG's chief financial officer, David Herzog, are overseeing that process.