AIG CEO Maurice Greenberg reaffirmed his company’s commitment to put together a rescue plan for Chiyoda Mutual Life, the failed Japanese insurer which has been in talks with AIG since October. At the same time a government spokesman said that Korea’s Financial Supervisory Commission was reviewing AIG’s proposal to invest in two Hyundai investment funds.
The Chiyoda Life rescue plan had reportedly been stalled after press reports that its assets exceeded its liabilities by 511.1 billion yen ($4.44 billion) rather than the 34.4 billion yen ($298 million) it had previously estimated.
In an interview with the Nihon Keizau Shimbun, as reported by Reuters News Agency, Greenberg stated he was “very optimistic” about reaching an agreement, but he also admitted that fixing the value of Chiyoda’s assets had become a problem. “It’s not a question of price, it’s a question of agreeing on what the negative net worth is, what is the value of the assets, what is the liability?” Greenberg was quoted as saying.
Regulators have postponed the submission of a rehabilitation plan for Chiyoda until the problem is solved. It was originally scheduled to resume operations by April of this year, but until a firm deal is reached with AIG, or possibly some other insurer, the company will remain under bankruptcy administration.
In Korea AIG and its partner W.L. Ross & Co. have been trying to persuade government authorities to participate in funding Hyundai Investment Trust & Securities Co. and Hyundai investment Trust Management Co. as part of any rescue package for the two troubled investment operations of the Hyundai group.
After initially rejecting the proposal, the government now appears to be rethinking its position, and has agreed to review AIG’s plans, which call for an investment of $873.8 million. It reportedly intends to announce a decision before the end of the month.
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