AIG’s Corebridge unit slips after stock market debut

Shares in Corebridge Financial, the life and asset management arm of insurance group AIG, slipped in early trading after it completed the largest US initial public offering of the year at the bottom of its target range.

The unenthusiastic reception for the first large IPO since May highlighted investor caution around new listings — even for profitable groups such as Corebridge that are seen as relatively low risk compared with growth-focused start-ups.

AIG, which remains Corebridge’s majority owner, sold 80mn shares, or 12 per cent of the company, at $21 per share, raising $1.7bn.

The deal gave Corebridge an initial market capitalisation of $13.5bn, 12.5 per cent below the top of its target range and 39 per cent below the price at which private equity group Blackstone bought a stake last November.

Stock markets have been volatile since Corebridge started its roadshow last week, with the S&P 500 suffering its worst sell-off since June 2020 on Tuesday. However, the index’s closing price on Wednesday was 1 per cent higher than when the company’s target price range was announced.

Shares in the carved-out business opened at $20.50 when they started trading on the New York Stock Exchange on Thursday afternoon, while the S&P 500 slid 0.2 per cent.

The stock market debut of Corebridge is being closely watched as a test of investor confidence in a broader reopening in the IPO market, which has been largely shut for most of the year because of market volatility and economic uncertainty.

It was the first company to raise more than $500mn in a US IPO since Bausch & Lomb’s rocky entry to public markets in May. The healthcare group had been considered a good candidate to reopen the market and lift confidence for further deals, but priced its offering below its target range.

Corebridge had aimed to list in the second quarter but AIG blamed the “high degree of equity market volatility” in May and June for the delay.

Like Bausch, backers were hopeful that Corebridge’s large size, history of profitability and the backing of a large parent group would make it a safe candidate to test investor appetite for new listings.

Corebridge reported revenue of $16bn in the first six months of 2022 and net income of $6bn, though the figures were flattered by gains tied to a reinsurer that Corebridge owns a minority stake in.

Adjusted return on average equity, the company’s preferred measure of profits which excludes the gain from Fortitude, the reinsurer, was 8.1 per cent, compared with its target range of 12 to 14 per cent.