NEW YORK_American International Group Inc. said Tuesday it is moving toward selling off a minority stake in property and casualty insurance business AIU Holdings.

AIG, once the world's largest insurer, is transferring AIU Holdings to a special purpose vehicle (SPV) in preparation for the potential sale of part of the business, which may include a public stock offering.

The embattled company announced March 2 that it would spin off AIU Holdings and give the company its own board of directors, management team and brand distinct from that of AIG, which has been tarnished by an executive bonus scandal, massive losses and its receipt of more than $180 billion in federal bailout funds.

AIU Holdings will serve as the holding company for AIG's commercial insurance, foreign general insurance and private client group units.

"Placing AIU Holdings into an SPV marks the latest significant step to position our strong insurance companies as independent businesses, which will benefit all stakeholders," said Edward Liddy, AIG chairman and chief executive, in a statement.


AIG will contribute AIU Holdings' equity into an SPV in exchange for preferred and common interests. AIG also plans to purchase AIU Holdings' stakes in International Lease Finance Corp., United Guaranty Corp. and Transatlantic Holdings Inc., further separating the property casualty operations from AIG and its other affiliates.

The Federal Reserve Bank of New York said the move is an important next step in the company's efforts "to place key business units in the best position to optimize their operations and maximize their value."

"It is in the best interests of the American taxpayers, the company and its customers and employees that these efforts succeed," the Fed said in the statement.

AIU Holdings will have more than 44,000 employees and 500 products and services serving 40 million commercial and individual customers across 130 countries. The companies which will make up AIU Holdings had about $43 billion in equity at Dec. 31, 2008, according to AIG.