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October 03, 2008 at 05:49 AM
American International Group Inc. says it may sell North American life subsidiaries such as American General, VALIC and SunAmerica and focus mainly on property-casualty operations.
AIG, New York, intends to continue to own a stake in life operations outside the United States, the company says.
The company is “actively at work on a number of alternatives for its financial products business and its securities lending program,” and its goal is for the divestiture process to “generate sufficient liquidity to repay the outstanding balance of its loan from the Federal Reserve Bank of New York and address its capital structure,” the company says.
As of Wednesday, AIG had drawn $61 billion of the $85 billion credit facility that the New York Fed set up for the company in mid-September.
AIG’s property-casualty operations generated about $40 billion in revenue in 2007, AIG says.
“We are refocusing on our traditional strengths in property and casualty underwriting,” AIG Chairman Edward Liddy said today during an analyst teleconference. “To realize our objective, we will sell a number of extraordinary businesses that are proving to be highly attractive to buyers.”
Many “strong, stable parties” already have contacted AIG about buying units of AIG, Liddy said.
“Our strong intent would be to sell [the U.S. life and retirement] operations in toto, to one buyer,” Liddy said.
The Blackstone Group L.P., New York, and J.P. Morgan Chase & Company, New York, are helping AIG run its asset divestiture program, AIG says.
AIG plans to use a “deliberate and disciplined approach” to selling assets, and, if efforts to get cash from the financial products and securities lending operations work, “we will sell fewer assets,” Liddy said.
AIG will prefer bigger transactions, and transactions involving well-known buyers with strong ratings and strong balance sheets, Liddy said.
“We will look favorably on preemptively priced offers,” Liddy said.
Andrew Kligerman, a securities analyst with UBS Investment Research, New York, asked Liddy why AIG had not put the New York Fed credit facility deal up for the shareholder vote that normally would have been required.
