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AIG Jumps on Deal to Sell Life and Retirement Business to Blackstone

American International Group jumps after it agrees to sell a stake in its life and retirement business to asset management giant Blackstone.

American International Group  (AIG) - Get American International Group, Inc. Report shares jumped Thursday after it agreed to sell a stake in its life and retirement business to Blackstone  (BX) - Get Blackstone Group Inc. Class A Report, securing financial flexibility for itself and continuing to advance that unit toward an initial public offering.

Shares in AIG gained after New York-based asset management giant Blackstone said it has agreed to acquire a 9.9% equity stake in AIG's life and retirement business for $2.2 billion in an all-cash deal.

The two firms also agreed to a “long-term strategic asset management relationship” that will start with $50 billion from AIG’s life and retirement portfolio and grow to $92.5 billion over the next six years.

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In a research note to clients, Credit Suisse analyst Andrew Kligerman said the partnership “may enhance investment returns, but may be at least partly offset by loss of shared costs with General Insurance,” noting that the cash from the two other deals could allow for more share buybacks and a paydown of debt.

Piper Sandler analyst Paul Newsome, meantime, wrote in his own research note that AIG’s life and retirement sale “starts the process for AIG’s life company IPO and gives a reference point for its valuation.”

Separately, Blackstone Real Estate Income Trust has agreed to acquire AIG's interests in a U.S. affordable housing portfolio for $5.1 billion, in an all-cash deal.

At last check, shares of AIG were up 2.97% at $47.79. The stock has risen nearly 25% year to date. Shares of Blackstone were up 2.88% at $101.47. Blackstone shares are up more than 56% year to date.