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United Guaranty, Mortgage Insurer of AIG Files For IPO With NYSE

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(Credit: Roberto Machado Noa/LightRocket/Getty Images) NEW YORK CITY, NEW YORK, UNITED STATES - 2015/10/17: AIG or American International Group signage on its building in New York. AIG is an American multinational insurance corporation with operations in 130 countries across the world. AIG or American International Group signage on its building...
March 31
8:59 AM 2016

United Guaranty Corp., the mortgage insurer of American International Group Inc. (AIG) has filed for an initial public offering with the US regulators. The move appears in line with its previous announcement to spin off the business.

A regulatory filing by United Guaranty with US Securities & Exchange Commission suggests, the offering may go up to $100 million. However, the figure is believed to be a place-holding one meant for calculation of fees and may be changed invariably.

The IPO filing also indicates, United Guaranty won't receive any of the proceeds of the share sale. Names of JPMorgan Chase & Co. and Morgan Stanley have been mentioned as deal underwriter, according to a report published in Bloomberg.

The spin off announcement has been made by AIG in January in a bid to redesign its operational structure mainly upon pressure from investor Carl Icahn. He has insisted the insurer to split into three parts.

In the announcement, AIG has declared selling up its 19.9% stake in United Guaranty. In February, AIG has added Icahn representative and billionaire John Paulson to board in a bid to avert boardroom fight, reports Reuters.

The regulatory filing by United Guaranty appears at a quiet time for the US IPOs. The number of public offerings is lowering now a day following existing volatility in the market. Only nine health care companies have been witnessed to go for public this year since others across several industries have postponed their offerings, reports The Business Times.

United Guaranty is the largest mortgage guarantor amongst AIG's US peers. Businesses of the second largest enterprise, Radian Group Inc. have been reduced 8% this year due to stricter capital rules coupled with heightened competition. Paulson, the recently nominated AIG board member has investment in Radian.

The AIG mortgage insurer has recorded net income of $359.8 million during last year which is 8.6% lower compared to that of a year ago. Meanwhile, revenue has been witnessed to decline by 11% to $922.6 million during the 12 months through December.

Businesses of United Guarantee have been deemed more risky by Standard & Poor's following announcement for spinning off. The downgrading in rating takes place this month citing reason that the company won't get implicit ongoing support from the parent company after the separation. Notably mentioning, United Guaranty intends to get enlisted with the New York Stock Exchange.

United Guaranty, mortgage insurer unit of AIG has reportedly been going for initial public offering upon enlistment with the NYSE. The insurer gets immense support from its parent company in conducting business and hence spinning off won't bring anything good for it. Ignoring the analysts' cautions, the insurer has applied for an IPO with intention to get enlisted with the NYSE.

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