For sale by AIG: A unit called Chartis

Troubled insurer spins off its property-casualty business into new company called Chartis in an effort to pay back taxpayers.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By David Goldman, staff writer

Bailout tracker
Follow the money: Bailout tracker
The government is engaged in a far-reaching - and expensive - effort to rescue the economy. Here's how you can keep tabs on the bailouts. More
Has the recession caused you to change your spending and saving habits?
  • Yes, permanently
  • Yes, but only for a short time
  • No

NEW YORK ( -- Maybe AIU sounded too much like AIG.

Bailed out insurer AIG on Monday said it would go forward with its previously announced plan to spin off its property-casualty insurance business long known as AIU.

The name of the new company is Chartis, AIG disclosed Monday.

Chartis, though officially separated from AIG, remains 100% owned by the embattled company. Kristian Moor, a former AIG executive vice president who headed the property-casualty group, was named Chartis' chief executive officer.

According to the company, the Chartis name derives from the Greek word for map, underscoring "the franchise's disciplined-yet-flexible approach to navigating changing marketplaces and complex risks worldwide."

According to AIG (AIG, Fortune 500) spokeswoman Christina Pretto, AIG is positioning Chartis to be more independent down the road. AIG is working to assemble an independent board and, perhaps, eventually an initial public offering, she said.

AIG is expected to use the proceeds from the eventual sale to pay back some of the $83.3 billion the government has pumped into the company.

Earlier this month, AIG similarly spun off foreign life insurance companies AIA and ALICO. The Federal Reserve will take stakes in AIA and ALICO later this quarter and in exchange forgive $25 billion in loans to the company. But that still leaves AIG with more than $58 billion to pay back.

The insurer may be able to make a good chunk of that by selling Chartis.

Though AIG lost nearly $100 billion last year, the unit now known as Chartis was profitable, with an operating income of $3.3 billion worldwide, according to the new company.

Chartis 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.

Still, some experts are skeptical that Chartis will succeed without the support of its parent company.

"We're talking about major companies," said Andy Barile chief executive of insurance consultancy Andrew Barile Consulting Corp. "They have all the ingredients, but the question is will they be able to execute?"

Barile said the question is whether Chartis will be able to maintain its "A" credit rating. A high credit rating keeps borrowing costs -- and premiums -- down. Chartis on its own is a mammoth company, big enough to have made the Fortune 500 if it had been an independent company. But without the ability to use AIG's other insurance businesses as a backstop, Chartis may have to battle for that credit rating.

"They're going to have to work hard at keeping their rating up now that they're standing on their own," said Barile. "You can call yourself whatever you want, but the insurance business boils down to 'what is the price of the policy?' " To top of page

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
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

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: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. 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 2018 and/or its affiliates.