AIG to Sell its Global Personal Travel Insurance and Assistance Business including Travel Guard® to Zurich

Rhea-AI Summary

American International Group (NYSE: AIG) has entered into a definitive agreement to sell its global personal travel insurance and assistance business, including Travel Guard, to Zurich Insurance Group for $600 million in cash, plus additional earn-out consideration. The transaction, which excludes AIG's operations in Japan and its joint venture in India, is expected to close by the end of 2024, pending regulatory approvals.

The sale aims to streamline AIG's portfolio, focusing on its core Global Property and Casualty Insurance business. AIG's Accident & Health business offerings are also excluded from the agreement.

Chairman and CEO Peter Zaffino confirmed that the deal is a strategic move for AIG, and assured a smooth transition for employees, customers, and partners. Evercore Group acted as financial advisor, with legal counsel from Willkie Farr & Gallagher LLP and Norton Rose Fulbright LLP.

Positive

• AIG will receive $600 million in cash plus additional earn-out consideration from Zurich Insurance Group.
• The sale will allow AIG to focus more on its core Global Property and Casualty Insurance business.

Negative

• The transaction excludes AIG's operations in Japan and its joint venture in India.
• AIG's Accident & Health business offerings are not included in the sale.

Financial Analyst

The sale of AIG's global personal travel insurance and assistance business to Zurich Insurance Group for $600 million in cash, plus additional earn-out consideration, is a significant move in the financial landscape. This transaction will allow AIG to streamline its focus on its core property and casualty insurance operations, which could lead to more efficient capital allocation and potentially higher profitability in the long term.

Short-term implications: The influx of $600 million will bolster AIG's cash reserves, providing additional liquidity that could be used for debt reduction, stock buybacks, or reinvestment in higher-margin segments. The market may respond positively in the short term due to the immediate cash influx and the strategic clarity it brings.

Long-term implications: By focusing on its core operations, AIG can potentially achieve better operational efficiencies and stronger financial performance. However, the success of this strategy depends on the effective reinvestment of the proceeds and the company's ability to grow its core segments. Investors should watch for subsequent quarterly earnings reports to gauge the impact of this divestiture.

An important consideration is the additional earn-out, which is contingent on the future performance of the divested business. This aspect introduces some uncertainty, as the final total compensation could vary.

Overall, the divestiture aligns well with AIG's strategic shift towards its core competencies, promising potential financial benefits both in the short and long term.

Insurance Market Analyst

The divestiture of AIG's global personal travel insurance and assistance business marks a strategic shift towards specialization. Travel Guard, known for its robust travel insurance offerings, will now benefit from Zurich's extensive resources and market presence. For Zurich, this acquisition expands its portfolio and enhances its customer service capabilities, particularly in the travel insurance sector.

Market Context: The travel insurance market has been recovering post-pandemic, with increasing demand for comprehensive travel coverage. Zurich's acquisition positions it to capitalize on this trend, potentially driving market share growth.

Strategic Alignment: For AIG, divesting a non-core segment allows it to concentrate on property and casualty insurance, where it has significant expertise. This focus may enhance AIG's competitive positioning and operational efficiency. Zurich’s integration plan for Travel Guard will be critical. Effective integration can lead to seamless service delivery and customer retention, which are essential for realizing the full value of the acquisition.

Overall, this move can be seen as Zurich bolstering its travel insurance offerings while AIG doubles down on its core strengths, both aiming for strategic gains in their respective markets.

Transaction Further Focuses AIG’s Portfolio on Core Global Property & Casualty Insurance Business

NEW YORK--(BUSINESS WIRE)-- American International Group, Inc. (NYSE: AIG) today announced that it has entered into a definitive agreement to sell its global individual personal travel insurance and assistance business to Zurich Insurance Group for $600 million in cash plus additional earn-out consideration. The agreement includes the Travel Guard business and its servicing capabilities, excluding Japan and our AIG joint venture arrangement in India.

Travel coverages offered through AIG’s Accident & Health business are also excluded from this agreement. The sale is expected to close by the end of 2024, subject to customary closing conditions, including regulatory approvals.

Peter Zaffino, Chairman and Chief Executive Officer of AIG commented: “Today’s announcement is another important strategic step in positioning AIG for the future. I am proud of the work our team has done to establish Travel Guard as a premier provider of personal travel insurance globally, bolstered by strong relationships with some of the world’s largest airlines, online travel agencies and credit card providers. I am confident that Travel Guard will continue its growth and success being part of Zurich Insurance Group. Our AIG colleagues will work closely with Zurich to ensure a seamless transition for employees, customers and our global distribution partners.”

AIG’s global personal travel insurance and assistance business provides a broad range of coverage options and services, including trip cancellation, medical assistance and evacuation. Current policyholders will continue to be covered with no disruption or change to their service.

Evercore Group L.L.C. acted as financial advisor and Willkie Farr & Gallagher LLP and Norton Rose Fulbright LLP acted as legal counsel to AIG.

About AIG

American International Group, Inc. (NYSE: AIG) is a leading global insurance organization. AIG provides insurance solutions that help businesses and individuals in approximately 190 countries and jurisdictions protect their assets and manage risks through AIG operations and network partners. For additional information, visit www.aig.com. This website with additional information about AIG has been provided as a convenience, and the information contained on such website is not incorporated by reference into this press release.

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/20240625000990/en/

AIG Contacts:

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

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

Source: American International Group, Inc.

FAQ

What did AIG announce about its travel insurance business?

AIG announced that it will sell its global personal travel insurance and assistance business, including Travel Guard, to Zurich Insurance Group for $600 million in cash plus additional earn-out consideration.

When will the sale of AIG's travel insurance business to Zurich be completed?

The sale is expected to close by the end of 2024, subject to customary closing conditions and regulatory approvals.

What impact will the sale have on AIG's core business?

The sale will allow AIG to focus more on its core Global Property and Casualty Insurance business.

Which parts of AIG's travel insurance business are excluded from the sale to Zurich?

The transaction excludes AIG's operations in Japan, its joint venture in India, and its Accident & Health business offerings.

Who acted as AIG's financial advisor for the sale of its travel insurance business?

Evercore Group acted as AIG's financial advisor for the sale.