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AIG plans focus on P/C business; Difficult credit market may challenge efforts to repay loan through asset sales, analysts say.

Publication: Business Insurance
Publication Date: 06-OCT-08 		Format: Online
Delivery: Immediate Online Access
Full Article Title: AIG plans focus on P/C business; Difficult credit market may challenge efforts to repay loan through asset sales, analysts say.(News)(American International Group Inc.)(property and casualty business)

Article Excerpt
Byline: JUDY GREENWALD

NEW YORK-American International Group Inc. last week formally announced plans to slim down to an insurer focused largely on core property/casualty insurance businesses, although questions remain as to how easily its earmarked assets will be sold.

Analysts question how much the company will be able to raise from selling operations amid difficult conditions in the credit market.

And time is of the essence for AIG, since it has less than two years to repay, at considerable interest rates, any funds borrowed from the $85 billion credit facility extended last month by the Federal Reserve Bank as part of the government's rescue plan for the insurer. As of Sept. 30, AIG had drawn $61 billion from the loan.

In setting out AIG's plan, Chairman and Chief Executive Officer Edward M. Liddy last week said the company intends to sell off everything but its core commercial property/ casualty insurance and foreign general insurance businesses, while retaining a "continuing ownership interest'' in its foreign life insurance operations.

"Everything else that doesn't fit under that definition we are considering for sale,'' Mr. Liddy said during a webcast with analysts last Friday.

AIG is seeking funds to repay the Federal Reserve loan and to generate enough capital for an "appropriate corporate structure going forward,'' he said.

He stressed during the call that AIG's property/casualty operations have not lost large...

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