AIG Advisor Group on the block

Giant insurer AIG is receiving inquiries for its network of four IBDs

Nov 17, 2015 @ 12:22 pm

By Bruce Kelly

The AIG Advisor Group is up for sale.

One of the largest networks of independent broker-dealers in the country, the AIG Advisor Group, recently hired a law firm, which in turn will select an investment bank to begin discussions with interested buyers, according to two sources with knowledge of the company's moves. The sources asked to remain anonymous.

The AIG Advisor Group is made up of four firms with 4,925 producing registered reps and advisers. It produced total revenue of $1.33 billion in 2014.

“It is possible that today you may see a news story regarding inquiries around a potential sale of AIG Advisor Group,” wrote Peter Harbeck, chairman of the Advisor Group, and Erica McGinnis, its CEO, in a memo to advisers Tuesday morning.

“We are writing to let you know that we are evaluating these inquiries,” according to the memo. “All interested parties have a favorable view of our growth prospects, are committed to the independent broker-dealer industry and are not among our competitors. Your broker-dealer president will hold a conference call later this week to discuss this in greater detail.”

The brokerage network is part of a “strategic review” its parent company, American International Group Inc., is undertaking, according to Kevin Dinino, a company spokesman.

“AIG is conducting a strategic review of all its priorities as part of its stated goal of focusing on its core services and reducing the complexity of its business,” Mr. Dinino wrote in an email to InvestmentNews. “This effort includes a review of the benefits associated with its ongoing ownership of a network of broker-dealers," he added. "We have received several inquiries regarding the Advisor Group business.”

Activist investor Carl Icahn has been pressuring AIG recently. According to Bloomberg News, Mr. Icahn told AIG CEO Peter Hancock in a letter that AIG should split into three companies to escape the restrictions imposed on the largest financial firms. One company would focus on life insurance, the second on property-casualty coverage and the third on mortgage guaranties.

Past CEO Robert Benmosche was widely regarded as a champion of financial advisers at AIG. He left the company in 2014 and died earlier this year.

The independent broker-dealer marketplace of firms for sale has recently become quite crowded. In September, InvestmentNews reported that Next Financial Group Inc. was on the block. Then this month, Cetera Financial Group, the retail brokerage owned by the embattled RCS Capital Corp., said it had half a dozen potential suitors kicking its tires.

The four firms that comprise the AIG Advisor Group are: FSC Securities Corp., Royal Alliance Associates Inc., SagePoint Financial Inc. and Woodbury Financial Services.

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