AIG to Transfer Property-Casualty Unit to Ease Sale

Wednesday, Apr 22,2009, 6:11:05 PM Click:

April 21 (Bloomberg) -- American International Group Inc., the insurer bailed out by the U.S., will transfer its property and casualty business to a special purpose vehicle to accelerate the sale of a minority stake in the operation.

AIG will purchase the unit’s interest in a reinsurer, airplane lessor and mortgage guarantor as part of the separation process, the New York-based insurer said today in a statement.

Chief Executive Officer Edward Liddy is reorganizing the insurer, once the world’s largest, as he seeks to rebrand units to avoid the stigma of the AIG name and prepare them for sale to help repay a government bailout that swelled to $182.5 billion. The property-casualty unit, AIU Holdings Inc., protects corporate customers against worker injuries, lawsuits and storm damage at factories and warehouses.

“Placing AIU Holdings into a special purpose vehicle marks the latest significant step to position our strong insurance companies as independent businesses,” Liddy said in the statement. Liddy said March 2 he may keep a majority stake in the operation while selling a portion in a public offering.

The decision follows AIG’s announcement last month that it will place its two largest non-U.S. life insurers in government trusts to position the companies for eventual sale or public offerings.

Liddy, appointed by the government to run AIG in September when the insurer agreed to turn over an 80 percent stake to the U.S., had struck deals to raise about $4.4 billion through asset sales. Under Liddy’s original plan, revealed in October, AIG was to emerge as a firm mostly providing property-casualty coverage to businesses.

The insurer, first saved from collapse in September with an $85 billion credit line, had to ask for help again in March after failing to sell enough subsidiaries to repay the government. The company got access to about $30 billion more from the Treasury. AIG’s rescue includes a $60 billion credit line, and the firm owed about $46 billion as of April 2.