AIG Announces Widespread Asset Sale

October 3, 2008 ( - American International Group (AIG) has announced a widespread asset selloff in a bid to generate enough money to repay its $85-billion Federal Reserve loan and refocus the ailing insurer on its core property and casualty lines.

According to the announcement, AIG plans to keep its U.S. property and casualty and foreign general insurance businesses and a continuing interest in its foreign life insurance operations. Other than that, the company said, AIG is looking to sell the rest of its portfolio.

Specifically, it is “also actively at work on a number of alternatives” for its Financial Products business and its securities lending program, according to the statement.

AIG’s intentions for its retirement services group were not immediately clear Friday, except for the admission in the company’s divestiture announcement that it would prefer to sell all of its U.S. life insurance operations in one piece.   SunAmerica Life Insurance Co., is considered AIG’s lead retirement services company.

News reports about the pending asset sales quoted AIG Chairman and Chief Executive Officer Edward M. Liddy   as using its U.S. life insurance operations as an example of that "sell in one piece" approach. The reason, according to Liddy: It will attract bigger and "more stable" companies to bid, which should reassure policyholders and shareholders.

"The preference is to sell it all as one unit," Liddy said, according to an A.M Best news report. "We have a preference to have larger transactions because they can be done with some speed, and will attract larger buyers. I think people will be putting preemptive bids on the table."

The news reports pointed out that part of the retirement services group are Variable Annuity Life Insurance Co., (VALIC), AIG Annuity Insurance Co., and AIG SunAmerica.

The A.M. Best report quoted insurance analyst Steven Schwartz as saying that SunAmerica is one of the leaders in sales of variable annuities and is strong in the independent broker dealer/registered representative channel.

itxtvisited="1"> According to Schwartz Sun Life "might be very interested" in the Sun America business, particularly because Sun Life recently brought some executives over from Philadelphia-based Lincoln National Corp (See  Sun Life turns to Ex-Lincoln Execs for Management Posts ). Lincoln National is a major player in the variable annuity market, he said.

itxtvisited="1"> The $85-billion Federal Reserve loan was part of a government bailout of the company that came during several weeks of tumult on Wall Street.