American International Group in recent weeks has sought to rally support among investors and credit-ratings firms for a controversial deal: the sale of securities backed by insurance policies on the lives of older people.
There have been few offerings of these types of securities, which critics have called "death bonds," "blood pools" and "collateralized death obligations" because they pay off when the insured dies, The Wall Street Journalreports. And AIG's effort so far isn't panning out. Standard & Poor's recently declined to provide a rating, an essential step in selling such securities to most investors.
The giant insurer's life-settlements portfolio totals about $18 billion in anticipated death benefits, according to the company's financial filings—or well over a third of the estimated $45 billion that has changed hands since the market revved up about a decade ago.
"We are looking at this portfolio as we evaluate AIG going forward," an AIG spokesman said, declining to elaborate to the paper.
The activity on AIG's part provides a glimpse into the company's entrepreneurial culture and shows how the company, slimmed down over the past two years as it raised cash to repay its 2008 government bailout, still has little-known pockets of business.