AIG targets year-end for asset sales

CEO says he expects to announce deals to pay off $85 billion government loan in fourth quarter.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Tami Luhby, CNNMoney.com senior writer

Is the worst of the stock market meltdown over?
  • Yes
  • No

NEW YORK (CNNMoney.com) -- American International Group's CEO said Monday that the troubled insurer should start selling off pieces of its sprawling global business by year end.

Some 15 to 20 buyers may each walk away with a unit of the troubled insurer, Chief Executive Edward Liddy told CNNMoney.com.

Liddy declined to comment on the prices the divisions are commanding, saying it is "too soon." But he expects to be able to repay the $85 billion government loan AIG (AIG, Fortune 500) received last month to keep it afloat as it unwinds its $1 trillion in assets.

"We were in a heck of a mess," Liddy said. "It's solvable. We can work our way out of it."

Liddy took charge of the company after the Federal Reserve arranged the unusual financing to prevent further turmoil in the already strained financial markets. In return, the government took a 79.9% stake in the company and gave the AIG two years to repay the debt by selling its assets.

The company does not expect to need additional financing beyond the $85 billion to continue operating, Liddy said. It has already drawn down $69 billion of that loan.

The Federal Reserve of New York said Oct. 8 that it would lend AIG up to $37.8 billion in exchange for investment-grade, fixed-income collateral.

The second loan was needed because AIG couldn't access the frozen credit markets to fund its daily operations, Liddy said. Depending on how the capital markets value its securities assets in the future, it might need more, he said.

Keeping property-casualty business

Liddy has spent the last month deciding which parts of the company to sell. In early October, the beleaguered insurance giant announced it would hold onto its property and casualty insurance businesses and retain a majority stake in its foreign life insurance operations. The property and casualty lines bring in more than $40 billion in revenue annually.

Everything else is on the table, Liddy said. The businesses include its aircraft leasing unit, asset management division, retirement services and U.S. life insurance operations.

Liddy said he regrets the company threw a $440,000 one-week retreat at the St. Regis Resort in Monarch Beach near San Diego, Calif., just days after the bailout. He said he was not aware of the junket at the time, but would look into recouping the costs and disciplining those involved.

AIG agreed Thursday to curb such expenditures after heavy criticism from Congress and New York state Attorney General Andrew Cuomo. The company canceled 160 conferences and events - some that carried price tags of as much as $750,000. It also has put on hold a nearly $10 million severance payment to outgoing chief financial officer Steven Bensinger.

"I apologize to the American people for those things," Liddy said on CNN. "They were terribly insensitive."  To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Want to buy -- and live in -- a piece of history? It's not that far out of reach. These historic homes are not only for sale, they are incredible bargains. More
5 ways retailers are tracking you If you think pesky salespeople are invading your personal space, check out these 5 technologies that are tracking your movements throughout a store. More
Moto X vs. Droid Turbo: Which Droid should you buy? Motorola has made the two best Android smartphones this year. Here's how they stack up. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.