AP Source: AIG agrees to sell 2 NYC buildings

Thursday, Jun 04,2009, 1:17:12 PM Click:

CHARLOTTE, North Carolina_The embattled insurer American International Group Inc. is selling its headquarters building in New York and a nearby building in a deal expected to close at the end of this summer, a person familiar with the matter said Wednesday.

But the person said that AIG is not disclosing the price or who the buyer is. The person asked for anonymity because the sale has not been made public yet.

The building sales are the latest move by AIG, which has received $182.5 billion in financial support from the government since September, to shed assets to repay the loan package.

The buildings are at 70 Pine Street and the adjacent 72 Wall Street in lower Manhattan.

The person said AIG employees will remain in its headquarters through 2010, and in the Wall Street building through the end of this year. The New York-based company is developing a relocation plan, the person said.

AIG is selling assets and spinning off some subsidiaries as it looks to raise new cash to repay government loans while becoming a smaller, more-efficient company. As part of the loan package, the government has also taken a roughly 80 percent stake in the huge insurance company.

AIG was devastated not by its traditional insurance operations, but by its financial products business, which underwrote risky credit derivatives contracts known as credit default swaps. The swaps are essentially insurance contracts protecting an investor against default on an underlying investment, such as mortgage-backed securities.

Rising defaults in the investments that AIG's contracts were insuring led to worries that the company would not be able to cover all of its obligations and that the ripple effects would touch off a new, even more intense phase of the credit crisis. That's when the government stepped in, fearing that without its help, AIG's collapse would cripple financial markets in the U.S. and around the world.

Shares of AIG slipped 2 cents to $1.54 in morning trading Wednesday. The stock has traded in a 52-week range of 33 cents to $36.77.