Formerly part of the American International Group (AIG), which required a US government bailout at the height of the global financial crisis in 2008, Hong Kong-based American International Assurance (AIA) separated from the group in 2009. A plan for UK-based Prudential to buy AIA for US$35.5 billion fell through, and AIA held an initial public offering in Hong Kong in 2010, raising US$20.5 billion.
AIA shares rise strongly after AIG sells stake in HK unit
AIA Group shares rose the most in 11 months yesterday. The stock also topped the turnover list.
Shares of the third-largest Asian-based insurer by market value rose 6.84 per cent to HK$28.10 after its parent firm, American International Group, sold US$2 billion of shares at a premium to Thursday's closing price.
Turnover in the stock topped HK$20.31 billion.
AIG cut its stake in the Hong Kong-based insurer to 13.69 per cent after selling 591.9 million shares at HK$26.50 each, according to a statement to the stock exchange.
Analysts said it would not be surprising to see more divestment by AIG of its stake in the near future, assuming that the equity market strengthened in the fourth quarter.
"AIG will definitely continue to sell the stake in AIA, [as] it only reduced less than 30 per cent of the available-to-sell portion this time," said Peter Pak, an executive director of BOCI Securities.
This is the third time AIG has sold down its stake in the insurer, following the US government bailout of the parent company during the financial crisis.
AIG chief executive Robert Benmosche is looking to reduce its bailout bill, which has swelled to US$182.3 billion.
AIA's new business has delivered eight consecutive quarters of growth under the guidance of chief executive Mark Tucker, who took over the company in 2010.
Meanwhile, China Pacific Insurance, the mainland's third-largest insurer, fell the most in a week before recovering to close with a slight loss after an investor dumped a block of shares at a discount.
The investor offered to sell 112.7 million China Pacific shares at HK$22.18 to HK$22.87 each, according to Bloomberg.
The stock closed 0.43 per cent weaker at HK$23 on a day of strong gains in the market, after hitting a low of HK$22.55 in the morning.
China Pacific reported a 55 per cent drop in profit for the first half to 2.64 billion yuan (HK$3.22 billion). This was mainly due to weakening investment income and slowing premium growth.
In July, funds controlled by American private equity firm Carlyle also sold US$738 million worth of stock in China Pacific.