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September 17, 2008 at 11:57 AM
Securities analysts and others are starting to speculate about who might end up with American International Group Inc.’s life and annuity subsidiaries and other assets.
The Federal Reserve System credit facility announced Tuesday will give AIG, New York, up to 2 years to dispose of its assets, but, if the company draws on the credit facility, it will have to pay a variable interest rate on the borrowings that will start at more than 11%.
Thomas Gallagher and Michael Zaremski, analysts in the New York office of Credit Suisse, write that the announcement implies that “the formerly largest global insurance company will potentially be unwound through a 1 to 2 year auction process.”
AIG’s problems mean that there will be plenty of “high quality businesses for sale, notably international life insurance, foreign general, and the domestic retirement business sold through the Variable Annuity Life Insurance Company (VALIC), a unit of the American General unit of AIG,” Gallagher and Zaremski write.
“We suspect that some of the big foreign players (Chinese, Canadian, European, and Australian insurers) may be interested buyers along with the usual large cap suspects domestically on both the life and P&C sides,” the analysts write.
