American International Group is buying Woodbury Financial Services, an independent broker-dealer, from The Hartford.

The deal price is up to $90 million, according to the Financial Times, and Woodbury will also pay a one-off $25 million dividend to the Hartford before the deal closes. However, the $90 million price tag is performance-related and could be reduced to $37.5 million depending on Woodbury’s performance between now and the close of the deal.

The Hartford said the transaction would generate a “modest gain” for it and have no material impact on next year’s earnings.

Woodbury will become part of AIG’s Advisor Group, a network of independent broker-dealers that falls under the SunAmerica Financial Group unit. The deal adds around 1,400 advisors to the network, which is made up of some 4,800 advisors at SagePoint Financial, Royal Alliance Associates, and FSC Securities Corporation.

“Woodbury Financial and Advisor Group are a natural fit, with complementary business models and a shared view of providing an open architecture platform for advisors within the independent broker-dealer segment,” said Patrick McEvoy, president and chief executive of Woodbury.

McEvoy will continue in this role after the transfer to AIG, charged with supporting and growing Woodbury from its Minnesota headquarters. The firm’s registered representatives will also continue under the same brand.

In recent months, Capital Guardian hired Brian Chapman from Woodbury as president of the independent channel, and he was afterwards followed by two Woodbury teams.  

The sale to AIG is notable because the insurer was heavily bailed out by the US government in 2008, receiving a rescue package worth up to $182 billion, shortly after Lehman Brothers collapsed. The firm said in July it had decreased outstanding government support by 83 per cent, through "repayments, withdrawals, exchanges, sales and other actions.” Following that, the US Treasury owns 1.06 billion shares of AIG common stock, it added.

The Hartford, meanwhile, is hunkering down to concentrate on its property and casualty, group benefits and mutual funds businesses, and is also in the process of selling its individual life and retirement plans unit.