American International Group, Inc. (AIG), which is is weighing plans to sell more than 15 of its businesses to repay the $85 billion loan the US Federal Reserve, today said that it intends to refocus the company on its core property and casualty insurance businesses, generate sufficient liquidity to repay the outstanding balance of its loan from the Federal Reserve Bank of New York and address its capital structure.
AIG Chairman and Chief Executive Officer Edward M. Liddy, said, "We are refocusing on our traditional strengths in property and casualty underwriting. We have a number of remarkable businesses with leading market positions and significant competitive advantages that could not be recreated today.
AIG plans to retain its US property and casualty and foreign general insurance businesses, and to retain a continuing ownership interest in its foreign life insurance operations. AIG's worldwide property and casualty businesses generated approximately $40 billion in revenues in 2007.
The company is exploring divestiture opportunities for its remaining high-quality businesses and assets (See: AIG may sell over 15 businesses to repay $85 billion Fed loan).
AIG has drawn $61 billion of the $85-billion of the US Federal reserve credit facility as of 30 September 2008.
It is also actively at work on a number of alternatives for its financial products business and its securities lending programme, which have been the recipient of as much as $53 billion - $54 billion from the $61 billion of the US Fed loan.
Liddy said, "To realise our objective, we will sell a number of extraordinary businesses that are proving to be highly attractive to buyers. We have already been contacted by numerous strong, stable parties, and we expect that buyers will recognise the value of these properties, be a good strategic fit and offer the greatest potential for growth, profitability, and continuing opportunities for employees. Our goal is to emerge from this process as a smaller but more nimble company that is solidly profitable and has good long-term growth prospects."
AIG's global coordinators for the divestiture programme are The Blackstone Group and JP Morgan.