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AIG Advisors: What's Next?

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In early October, American International Group said it would “refocus the company on its core property and casualty insurance businesses, generate sufficient liquidity to repay the outstanding balance of its loan from the Federal Reserve Bank of New York and address its capital structure.” AIG had drawn $61 billion on the Fed credit facility as of September 30, 2008.

That means that the broker-dealers in the AIG Advisor Group are up for sale: AIG Financial Advisors of Phoenix, FSC Securities Corporation of Atlanta and Royal Alliance of New York. The group includes some 7,500 advisors and is led by Larry Roth. Recently, the group tapped Jeff Auld to lead AIG Financial Advisors and Mark Schlafly to head FSC.

Among the likely suitors for the broker-dealers are LPL Financial and Raymond James, industry experts suggest.

While the broker-dealers are being put up for sale, AIG explains that it plans to retain its U.S. property and casualty and foreign general insurance businesses, and to retain a continuing ownership interest in its foreign life insurance operations. AIG’s worldwide property and casualty businesses generated about $40 billion in revenues in 2007.

“We are refocusing on our traditional strengths in property and casualty underwriting,” says AIG Chairman and Chief Executive Officer Edward M. Liddy. “We have a number of remarkable businesses with leading market positions and significant competitive advantages that could not be recreated today.

“To realize our objective, we will sell a number of extraordinary businesses that are proving to be highly attractive to buyers,” Liddy explains. “We have already been contacted by numerous strong, stable parties, and we expect that buyers will recognize the value of these properties, be a good strategic fit and offer the greatest potential for growth, profitability and continuing opportunities for employees. Our goal is to emerge from this process as a smaller but more nimble company that is solidly profitable and has good long-term growth prospects.”

AIG’s global coordinators for the divestiture program are the Blackstone Group and J.P. Morgan.

Janet Levaux, MBA/MA, is the managing editor of Research; reach her at [email protected].


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