AIG'S FUTURE:The 400 Irish staff of embattled insurance giant American International Group (AIG) may know wher their future lies as soon as next week, following comments yesterday by the company's chief executive.
Edward Liddy, appointed following a federal takeover last week in exchange for an $85 billion loan, said the company should have a list of assets it wants to sell by next week.
AIG's stock jumped as much as 21 per cent after Credit Suisse analysts put AIG's salable value at $82 billion, and Mr Liddy said he expects it to emerge from the federal bailout as a leaner, stronger company.
AIG, the largest US insurer by assets, may need to sell more than half its businesses to repay the debt, Credit Suisse said in a note to investors.
The New York-based insurer operates in more than 100 countries.
AIG Ireland is a major commercial insurer with annual premiums of about €200 million.
Its profits rose to €44.1 million in 2007 from €24 million the previous year.
Mr Liddy said he intends to pay off the two-year loan early and that AIG will be "nimbler" after asset sales.
The US government agreed to extend the credit line in exchange for a 79.9 per cent stake after the Federal Reserve said AIG's failure would disrupt the financial markets.
"AIG has plenty of high-quality businesses potentially for sale," said Credit Suisse analyst Thomas Gallagher. Competitors from the US, Canada, Europe, China and Australia may be interested in units, he said.
The insurer's overseas life insurance and US retirement services units are the most "coveted" businesses, according to Mr Gallagher.
AIG's foreign life insurance division could sell for more than $60 billion before taxes and its US life and retirement companies may fetch $25.2 billion, Mr Gallagher said.
The aircraft leasing unit could sell for $3.4 billion before taxes, he said.
AIG stock has more than doubled since September 17th, when a lawyer for former chief executive Maurice "Hank" Greenberg said he may try to end government involvement in the insurer "as prompt[ly] as possible".
AIG sold for more than $72 a share in December 2006.
The insurer may face costs of about $33 billion related to bad investments and credit-default swaps, Mr Gallagher said.
The swaps, which back securities linked to subprime mortgages, led to about $25 billion in writedowns over three quarters.
AIG already borrowed $28 billion as of September 17th, the Federal Reserve said last week, even though full specifics of the accord with the government have not been publicly released.
Mr Liddy has told employees that he won't "liquidate" the company and may have a plan for assets sales by next week.
AIG also may seek buyers for some of its $16 billion in global real estate holdings in more than 30 countries.
AIG listed "real estate and other fixed assets, net of accumulated depreciation" of $5.7 billion at the end of June, according to a quarterly filing with regulators.
A financial supplement on the company's website lists $10.3 billion of real estate listed under "total AIG other invested assets".
Shareholders met yesterday in New York to discuss the possibility of raising enough money to derail the US government takeover. - ( Bloomberg)
