“Recent challenges in the global economy” are forcing American International Group to delay the planned spinoff of its International Lease Finance Corp (ILFC) unit, thereby postponing its full return to financial health.
Comments by AIG officials in a securities filing Friday made it clear that ILFC, which requires a huge amount of cash to finance its businesses, will remain a headache for AIG for the foreseeable future.
The comments by Robert Benmosche, AIG president and CEO, and a related filing to the Securities and Exchange Commission made in connection with its second quarter earnings report were the only blot in an obviously good day for AIG.
First, it announced a positive earnings report that indicated its core insurance businesses were growing. Second, it announced that it was repurchasing three million shares of its own stock as part of a Treasury offering of AIG stock through an initial public offering.
Third, it said that it was comfortable with potential federal regulation by the Federal Reserve Board.
And, fourth, in a conference call with analysts that followed the release of its earnings report, Benmosche said, In American International Assurance, its Asian life insurance subsidiary which it has partially spun off, “we have a very good performing company out there.”
And, in a further comment, he lauded Mark Tucker, its CEO, for doing “an outstanding job” running that business. “And so, we’re looking for the right time and the right price to monetize our ownership of AIA,” Benmosche said.
AIA has 23 million policyholders in 15 fast-growing countries in Asia, and Tucker, a former professional soccer player who formerly headed Prudential Insurance of the United Kingdom, steered it through an IPO in 2010 which provided AIG with $20.5 billion which it used to help pay back the U.S. government for its investment in AIG. AIG now owns approximately 19+ percent of AIA.
ILFC is another story. AIG has been trying to spin it off through an IPO since filing notice of its plans with the SEC in early September 2011. The plans were updated through an amended filing in June.
Under the amendment plan, ILFC, ILFC Holdings, Inc., an indirect wholly owned subsidiary of AIG, would become a direct wholly-owned subsidiary of ILFC Holdings, Inc. prior to the consummation of the initial public offering. The number of shares to be offered, price range and timing of the proposed offering have not yet been determined, the filing said.