AIG Plowing Ahead With Asset Sales

AIG said it sold a major asset-management unit and reports have the insurer moving ahead with deals for several major life-insurance units.
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American International Group

(AIG) - Get Report

is set to be in the spotlight on Tuesday, with signs that the firm is moving full-speed ahead on plans for major asset sales.

Despite earlier comments by new CEO Robert Benmosche that the insurer may wait up to three years to lock in better pricing, AIG said over the weekend that it had sold one major asset-management unit for an estimated $500 million. Reports circulated on Monday that AIG is moving ahead with deals for several major life-insurance units as well.

Chinatrust Financial

has made a $2.4 billion bid for AIG's Taiwan

Nan Shan Life

unit, according to


, topping rivals like

Primus Financial

. The

Wall Street Journal

also reports that AIG is prepping other life-insurance units for initial public offerings next year, whether or not they occur, so that Benmosche can quickly take advantage of opportunities in the market.

"I don't liquidate things, I build them," Benmosche said during an Aug. 4 employee meeting, according to


. "When we get the fair value for those businesses, that's when we're going to sell them; it's not going to be before."

The bullish sentiment that fostered the Chinatrust-Primus bidding, combined with Benmosche's bluster, may help future deals. But based on the pricing for the deal over the weekend, it's unclear how AIG will fare.

The company will sell part of its asset management businesses to Bridge Partners, a company owned by Richard Li's

Pacific Century Group

. The Hong Kong-based private-equity firm will pay $300 million up front, then an estimated $200 million based on performance which has been sketchy recently.

The assets being sold come from a division that posted a $222 million operating loss last quarter, amid client withdrawals and other stresses. The types of assets managed there include $88.7 billion worth of private equity, hedge fund of funds, equities and fixed income investments. AIG will hold onto another in-house part of the division that manages $480 billion in assets.

It's worth noting that just months ago the unit had received bids of $800 million, but weak performance, client withdrawals and AIG's tarnished reputation made the ultimate price less competitive.

The troubled firm is selling these assets as part of a plan to restructure itself and pay off massive debt to the government. AIG now owes more than $38 billion on a $60 billion credit line from the

Federal Reserve

. The Treasury Department also has plunged $70 billion worth of capital into AIG in exchange for preferred stock, an investment the firm will have to repay to become wholly independent.

Those two investments are separate from a $52.5 billion deal with the government to purchase toxic assets owned or backed by the insurer.

AIG has announced nearly $9.8 billion in divestitures since the government stepped in to bail it out nearly a year ago.

-- Written by Lauren Tara LaCapra in New York