Now that its parent has announced plans to sell off portions of itself, the AIG Advisor Group is looking for a new home.
Early this month, AIG’s CEO Edward Liddy announced that the company, which survived a near failure thanks to an $85 billion loan from the Federal Reserve, would be selling some of its businesses in order to pay back some debt. While it will hold on its property and casualty businesses, the company’s aircraft leasing unit, asset management division, retirement services and U.S. life insurance operations will be sold.
That’s where the firm’s three independent b/ds come in. Royal Alliance, AIG Financial Advisors and FSC Securities are part of AIG’s retirement services division. (This also includes product sales divisions like AIG’s annuity business.) The combined broker/dealers brought in $1.3 billion in production revenues in 2007. According to a source that works with the management, the group is definitely being sold and is in search of the right buyer.
But that may be a problem. Ideally, AIG would like to sell the retirement services division in one package to a single buyer. That would include the three independent b/ds and their sales force of about 5,000 reps; AIG Annuity, the largest issuer of fixed annuities in the U.S.; AIG Retirement, a retirement plan provider; AIG SunAmerica, a retirement income group; AIG SunAmerica Asset Management; AIG SunAmerica Affordable Housing Partners; and AIG SunAmerica Alternative Investments.
But this combination of retirement product companies and independent b/ds might be more than some buyers want to swallow. “Packaging both together may seem like a more efficient sell for AIG, but there are a lot of buyers out there who may just want the b/ds without the retirement products. Or vice versa,” says Larry Papike, president and owner of Cross-Search, a Jamul, Calif.-based recruiting firm.
For instance, firms like LPL or First Allied that have shown interest in growth through acquisition could probably come up with the capital to buy up AIG’s independent b/ds. LPL has already been down this route—in March, 2007, the firm acquired three Pacific Life Insurance Company b/ds, adding on 2,200 reps to its advisor force. (Click here for more on that deal.) “LPL and the other big acquirers would be great for AIG’s b/ds, but they won’t want to deal with the retirement products,” says one recruiter.
On the other hand, there is one firm that analysts say may be able to buy the whole package. MetLife, another insurance giant, could be a good fit since it’s already parent to independent b/ds Walnut Street Securities and Tower Square Securities. The company declined to comment on speculation about such a deal happening.
A source familiar with the situation says a buyer for AIG’s Advisor Group will likely be announced in the next two weeks. “They’re not stupid. They know the more time it takes to get this settled, the more time its reps have to look for a Plan B,” he says. AIG did not return calls or e-mails from Registered Rep.