NEW YORK (CNNMoney.com) -- AIG has reportedly changed its plans for restructuring its insurance business and its strategy for paying back the $70 billion it still owes taxpayers.
The troubled insurer is no longer planning to spin off its property-casualty insurance business, recently renamed "Chartis," through an initial public offering, according to Reuters. AIG had never fully committed to a Chartis IPO, but the troubled insurer put the possibility on the table March 2 as a way to raise money to repay government loans.
AIG declined to comment.
Chartis was technically separated from AIG and became its own company on July 27, though it remains 100% owned by its embattled parent company.
The separated property-casualty business is made up of the three former AIG units: commercial insurance, foreign general insurance and private client group. They pay a combined $71 million in claims every day, on average, and had $32.1 billion in cash on hand to pay claims at the end of 2008. Though AIG lost nearly $100 billion in 2008, Chartis was profitable, with an operating income of $3.3 billion worldwide.
AIG's former Chief Executive Edward Liddy had wanted to separate AIG's insurance units, since they had been adversely affected by the weight of the parent company's still-sizeable portfolio of troubled assets. The AIG name has become synonymous with the economic downfall, and the company and its major stakeholders -- including the U.S. government -- had believed a separation was necessary.
But AIG's new CEO Robert Benmosche has said that he wants to hold on to AIG's core assets while focusing on selling off less important units to pay back the government. Benmosche has said holding onto core assets will maximize the company's value.
Earlier this month, AIG wiped out $25 billion of its debt to taxpayers by selling stakes in two foreign life insurance subsidiaries to the New York Federal Reserve. The company has also fared better recently, posting two profitable quarters in a row, aided by a recovery in the value of its asset portfolio, although its underlying insurance business remained weak.
The government, which has given AIG a bailout worth up to $181 billion, believed the separation of AIG's property and casualty business would help to maximize the value of the insurance business. When AIG announced its plans in March, the New York Federal Reserve said the separation was "in the best interests of the American taxpayers" and placed AIG's "key business units in the best position to optimize their operations."
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