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AIG to sell as many assets as needed to pay bailout
Friday October 3, 10:27 am ET
NEW YORK (Reuters) - American International Group Inc (NYSE:AIG - News), the insurer crippled by losses on bad mortgage bets, said on Friday it plans to sell as many assets as needed to repay up to $85 billion of borrowings from the U.S. government.
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However, AIG Chairman and Chief Executive Edward Liddy said in a conference call with analysts he didn't expect a fire sale and buyers would have to assume the debt of AIG businesses they acquired.
The company, whose shares rose as much as 12.5 percent in early trading, said it would focus in its property, casualty and foreign general insurance units, and was working on alternatives for its financial products business and its securities lending program.
"We have already been contacted by numerous strong, stable parties, and we expect that buyers will recognize the value of these properties," Liddy said in a statement.
Even though the company didn't disclose all the assets it would sell, it said the plan includes some businesses outside the United States, primarily parts of American Life Insurance Co (ALICO), which operates as a life insurer in more than 55 nations and regions.
Liddy added he wouldn't be surprised to see sovereign wealth funds providing resources to acquire some AIG businesses.
Maurice Greenberg, former chief executive of AIG who left the company in 2005 following an accounting scandal, has asked Liddy for the chance to bid on AIG assets.
Once the world's largest insurer, AIG accepted a federal bailout on September 16 -- that would give the government 80 percent ownership in the company -- after losses in its financial products unit drove it to the brink of collapse.
The deal carries high interest and fees, and borrowings must be repaid within two years.
The company also suspended dividends on its common stock.
AIG's troubles, much like those of some of its Wall Street peers, stem from guarantees it wrote on mortgage-linked derivatives that have resulted in $18 billion of losses over the past three quarters.
The company turned to the Fed after unsuccessful negotiations with several private equity firms and Warren Buffett's Berkshire Hathaway (NYSE:BRK-A - News).
AIG said it had drawn $61 billion on the Federal Reserve facility as of September 30 and used those proceeds to cover securities lending and ensure liquidity.
The insurer, at the end of 2007, had 116,000 employees in operations throughout 130 countries and territories.
AIG's shares, which have traded as high as $70.13 in the last year, fell to $1.25 in the hours before the bailout. The shares were up 48 cents to $4.48 on the New York Stock Exchange.
(Reporting by Juan Lagorio, Euan Rocha and Lilla Zuill, editing by Derek Caney and Steve Orlofsky)