(Bloomberg News) American International Group Inc., the insurer majority-owned by the U.S. government, could create value for shareholders by buying a unit of Hartford Financial Services Group Inc., a Sanford C. Bernstein analyst said.
"The idea of buying something from Hartford, who's in a forced-sale process because they have to satisfy their investors, and have gone through their own challenging period, that sort of thing is generally one that you'd be supportive of," Josh Stirling, an analyst for Bernstein, said in a phone interview today. "This is more likely buying assets at reasonable value that are tactical" and could boost AIG's revenue while reducing back-office costs, he said.
AIG may be negotiating to buy Hartford's independent broker-dealer Woodbury Financial Services, InvestmentNews reported yesterday, citing two people with knowledge of the matter who weren't identified. Hartford said on March 21 that it was seeking buyers for Woodbury as part of a plan to focus on its property-casualty business, after calls by hedge-fund manager John Paulson to break the company in two.
"This is probably a small transaction for AIG," rather than one that would transform its business, said Stirling. AIG already has its own independent broker-dealer, he said.
Jay Wintrob, the head of New York-based AIG's life insurer, didn't rule out an acquisition of some Hartford units, when asked at a conference on March 22. AIG, which has been selling assets to repay a 2008 government bailout that swelled to $182.3 billion, had been "acquisitive" in the past and would continue to look at purchasing assets, he said at the conference.
A deal could be announced before Woodbury's national sales conference in mid-August, InvestmentNews reported.
Shannon Lapierre, a spokeswoman for Hartford, and AIG's Jim Ankner declined to comment on the potential sale.
Hartford, based in the Connecticut city of the same name, fell 1.2 percent to $16.08 in New York trading. AIG declined 1.1 percent to $30.68.