AIG to Redeem its Series A Preferred Stock, Represented by Depositary Shares

Rhea-AI Summary

American International Group, Inc. (AIG) has announced the redemption of all outstanding shares of its Series A 5.85% Non-Cumulative Perpetual Preferred Stock and corresponding Depositary Shares on March 15, 2024. The redemption price per share of Series A Preferred Stock will be $25,000, with 20,000 shares and 20,000,000 Depositary Shares outstanding as of January 31, 2024.

Insights

Financial Analyst

The redemption of preferred stock is a significant financial event for American International Group, Inc. (AIG). This move to redeem the Series A 5.85% Non-Cumulative Perpetual Preferred Stock could indicate that AIG is optimizing its capital structure. By retiring the preferred stock, AIG is likely reducing its cost of capital, as preferred stock typically carries a higher dividend rate than debt. The redemption price of $25,000 per share, or $25.00 per Depositary Share, is a standard return of the par value. The fact that the Redemption Price does not include undeclared dividends suggests that AIG is current on its dividend payments, which is a positive sign of financial health.

From a financial perspective, the redemption could be funded through excess cash reserves or by issuing new debt at potentially lower interest rates, given the current interest rate environment. This action may positively affect AIG's earnings per share (EPS) by reducing the amount of dividends it pays out to preferred shareholders, which could, in turn, be beneficial for common stockholders. However, this could also imply that AIG is not finding enough high-return investment opportunities to deploy its capital, leading to a preference for reducing more expensive equity.

Market Research Analyst

The redemption of preferred shares is often interpreted as a positive signal by the market, as it can reflect a company's confidence in its financial stability and future earnings potential. For AIG, this action may be viewed favorably by investors and analysts, as it demonstrates proactive financial management. The market's response to such news typically depends on the context in which the redemption occurs. If the redemption is part of a broader strategy to streamline AIG's capital structure and improve return on equity (ROE), it may lead to an upward revaluation of AIG's stock by the market.

It is also important to consider the impact on preferred shareholders. While they receive the par value of their shares, they will lose the steady dividends that preferred shares offer. For investors who depend on these dividends for income, this could necessitate a reallocation of their portfolio to find similar yields.

Legal Expert

The redemption process for preferred stock is governed by the terms specified in the securities' prospectus, which outlines redemption rights and procedures. It is crucial for AIG to adhere to these legal requirements, including providing timely and proper notice to the registered holders of the Depositary Shares. The role of Equiniti Trust Company as the Depositary is to manage the technical aspects of the redemption process, ensuring that all legal protocols are followed and that shareholders receive the funds to which they are entitled.

Moreover, the redemption must comply with securities regulations, which safeguard the interests of investors. If AIG manages the redemption process effectively, without legal missteps, it will maintain shareholder trust and avoid potential litigation or regulatory scrutiny, which could negatively impact the company's reputation and stock value.

NEW YORK--(BUSINESS WIRE)-- American International Group, Inc. (NYSE: AIG) today announced that it will redeem all outstanding shares of its Series A 5.85% Non-Cumulative Perpetual Preferred Stock (CUSIP 026874 750 / ISIN US0268747500) (the “Series A Preferred Stock”) and all the corresponding Depositary Shares (CUSIP 026874 768 / ISIN US0268747682) (the “Depositary Shares”), each representing a 1/1,000^th interest in a share of Series A Preferred Stock, on March 15, 2024 (the “Redemption Date”). The redemption price per share of Series A Preferred Stock will be $25,000 (equivalent to $25.00 per Depositary Share) (the “Redemption Price”). The Redemption Price does not include an amount equal to any dividends per share that have been declared but not paid prior to the Redemption Date and that will be payable on the Redemption Date to holders of record on the record date for such dividend payment. As of January 31, 2024, 20,000 shares of Series A Preferred Stock and 20,000,000 Depositary Shares were outstanding.

This press release does not constitute a notice of redemption of the Series A Preferred Stock or the corresponding Depositary Shares. Holders of the Depositary Shares should refer to the notice of redemption delivered to the registered holders of the Depositary Shares by Equiniti Trust Company, as Depositary, with respect to the Depositary Shares.

Certain statements in this press release, including those describing the completion of the redemption, constitute forward-looking statements. These statements are not historical facts but instead represent only AIG’s belief regarding future events, many of which, by their nature, are inherently uncertain and outside AIG’s control. It is possible that actual results will differ, possibly materially, from the anticipated results indicated in these statements. Factors that could cause actual results to differ, possibly materially, from those in the forward-looking statements are discussed throughout AIG’s periodic filings with the SEC pursuant to the Securities Exchange Act of 1934.

About AIG

American International Group, Inc. (AIG) is a leading global insurance organization. AIG member companies provide insurance solutions that help businesses and individuals in approximately 70 countries and jurisdictions protect their assets and manage risks. For additional information, visit www.aig.com. AIG common stock is listed on the New York Stock Exchange.

AIG is the marketing name for the worldwide operations of American International Group, Inc. All products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Products or services may not be available in all countries and jurisdictions, and coverage is subject to underwriting requirements and actual policy language. Non-insurance products and services may be provided by independent third parties. Certain property casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are therefore not protected by such funds.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240131549682/en/

Quentin McMillan (Investors): quentin.mcmillan@aig.com

Claire Talcott (Media): claire.talcott@aig.com

Source: American International Group, Inc.

FAQ

What is the ticker symbol for American International Group, Inc.?

The ticker symbol for American International Group, Inc. is AIG.

When will American International Group, Inc. redeem all outstanding shares of its Series A 5.85% Non-Cumulative Perpetual Preferred Stock and corresponding Depositary Shares?

American International Group, Inc. will redeem all outstanding shares of its Series A 5.85% Non-Cumulative Perpetual Preferred Stock and corresponding Depositary Shares on March 15, 2024.

What is the redemption price per share of Series A Preferred Stock?

The redemption price per share of Series A Preferred Stock will be $25,000.

How many shares of Series A Preferred Stock and Depositary Shares were outstanding as of January 31, 2024?

As of January 31, 2024, 20,000 shares of Series A Preferred Stock and 20,000,000 Depositary Shares were outstanding.