AIG to receive $590M from the sale of Arch Capital's stock

American International Group will receive $590 million in gross proceeds from the sale of a portion of the Arch Capital Group stock it received in the United Guaranty Corp. transaction.

Arch paid $3.4 billion for UG, with $2.2 billion of that in cash and the remainder in stock when the deal closed at the end of last year.

AIG will convert 638,141 of preferred shares in Arch to 6.38 million shares of common stock and then sell them to the public in a secondary offering. These shares have been priced at $92.50.

There is a 30-day option for the underwriters to purchase an additional 957,210 shares of common stock. If exercised, AIG will receive an additional $89 million.

After the sale is completed AIG would still own 524,420 convertible preferred shares of Arch. Those shares are subject to a lock-up agreement that expires on Jan. 15, 2018.

The offering is being led by Barclays Capital Inc. and Wells Fargo Securities as joint book-running managers. Arch is not receiving any proceeds from the sale.