American International Group has revealed plans to spin off its life & retirement business, which accounted for nearly a third of the group’s revenue last year.

The move follows a comprehensive review of the company’s existing composite structure, including strategic, operational, capital and tax implications.

The review was carried out by the company’s executive management team in collaboration with independent financial and legal advisors and oversight from the AIG Board of Directors.

AIG is currently the only US-listed insurer that operates life and property and casualty units together.

The company said its top management and board believe that a simplified corporate structure will result in ‘significant value for shareholders and other stakeholders’.

However, the company is yet finalise on how to go ahead with the separation plan, which will lead to the complete disunion of its life insurance business.

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AIG CEO Brian Duperreault said: “Over the last three years, we have taken significant action to de-risk AIG and position the company for profitable growth, including fortifying General Insurance, diversifying Life & Retirement, significantly strengthening AIG’s capital and liquidity position, and building a world-class team.

“This foundational work has positioned AIG to pursue a separation of Life & Retirement enabling both companies to prosper as stand-alone entities.”

AIG president and global chief operating officer as well as CEO-elect Peter Zaffino added: “Across AIG, we have made significant progress executing on our strategy to deliver value for our clients, distribution partners, shareholders and other stakeholders.

“Our businesses can be further strengthened by separating Life & Retirement from AIG, which we believe will enable each entity to achieve a more appropriate and sustainable valuation.”

The separation transaction is subject to the satisfaction of various conditions and approvals, including approval by the AIG Board of Directors, receipt of insurance and other required regulatory approvals.

Meanwhile, AIG recently settled a lawsuit associated with seven cross-border transactions made in the mid-1990s that it allegedly used as abusive tax shelters to lower its US taxes.