AIG's Finance Unit Details Branch Closures and 900 Job Cuts

American International Group Inc.'s consumer finance division, American General Finance Corp., has detailed how it's been slashing expenses -- including the closure of more than a hundred branch offices and the elimination of 900 employees in the first half of 2009.

In a quarterly filing with the U.S. Securities and Exchange Commission, the consumer lender said that in those six months it "closed 145 branch offices, reduced retail sales financing operations, reduced our number of employees by 900 through reductions in force and attrition, and sold $1.4 billion of finance receivables held for sale."

The report added, "We may implement further measures to preserve our liquidity and capital." It said, "the exact nature and magnitude of any additional measures will be driven by prevailing market conditions, our available resources and needs, and the results of our operations."

With its parent company's continue support, the report said, "we believe that we will have adequate liquidity to finance and operate our business and repay our obligations for at least the next 12 months."

The company is among the components of AIG (NYSE: AIG) being prepared for a potential sale (BestWire, July 20, 2009). Until then, the business is still living in the shadow of the financial crisis that nearly caused the collapse of AIG. "Our traditional borrowing sources, including our ability to issue debt in the capital markets, have remained unavailable," according to the report to regulators.

American General's financial filing for the quarter showed a net loss of $227.2 million -- adding up to a $467.8 million loss for the first half of 2009.

It's parent company recently reported better news. In early August, the insurance giant posted its first quarterly profit since the third quarter of 2007 (BestWire, Aug. 7, 2009). Earlier this year, AIG, which has remained solvent under a $182.5 billion federal rescue plan, received an $800 million loan from American General, after AIG forwarded $600 million to the division to enable it to meet the terms of a 2008 line of credit (BestWire, April 7, 2009).

Most AIG insurance companies currently have a Best's Financial Strength Rating of A (Excellent).

Shares of American International Group were at $24.24 in afternoon trading on Aug. 14, down 3.12% from the previous close.