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AIG Investments for sale

American International Group will retain core business lines while entertaining the divestiture of all remaining units. The embattled insurance company plans to sell as many assets as necessary to repay its $85bn loan from the US government.

Ailing US insurance giant American International Group will consider a sale of most business lines, including AIG Investments, to pay back an $85 billion loan from the US government, newly appointed chief executive Edward Liddy said today on an investor update conference call.

“We are going to retain our US property and casualty businesses, we are going to retain our foreign general insurance business, and we are going to maintain a continuing interest in our foreign life insurance operations,” Liddy said. “Literally, everything else that doesn’t fit under that definition we are considering for sale.”

Edward Liddy

The government last month agreed to extend a two-year, $85 billion (€60 billion) revolving credit facility to AIG to ensure the company continued operating and didn’t crash into bankruptcy. The government in return will receive a 79.9 percent stake in the company in the form of stock warrants.

AIG had drawn $61 billion on the Fed credit facility as of 30 September.

“The proceeds from any divestitures will be used to repay the Federal Reserve loan and to address our capital structure going forward,” Liddy said.

Asset management arm AIG Investments has $758.2 billion in assets under management including $29 billion in private equity assets as of 30 June. In addition to private equity, which includes secondaries and infrastructure, the group has platforms for equities, fixed income, hedge funds and real estate.

Liddy is the former chairman and chief executive officer of Allstate. He was most recently an operating partner with private equity firm Clayton, Dubilier & Rice until being selected by the US government to head AIG. Previous AIG chief executive Robert Willumstad was forced to step down from his role by US Treasury Secretary Henry Paulson.