American International Group’s property/casualty division is moving swiftly to break ties with its parent company, setting itself up to be a stand-alone company, said AIG Chief Executive Edward Liddy.
But the name the spun-off company will go by is still in question.
“AIU Holdings, or whatever name it finally becomes, will live to fight another day,” said Liddy in an interview with Reuters on Wednesday.
AIG is spinning off this business — which includes its U.S. commercial insurance business and international foreign general division — with a view to eventually floating the company in a public offering.
Liddy said an initial public offering of at least part of the company could be staged as soon as the first or second quarter of 2010.
He is also open to selling the company, in whole or part, if a buyer emerges. AIG has sold a dozen small assets but has struggled to sell large properties with the credit crisis shrinking financing options.
AIG is racing against the clock to spin off its strong insurance operations, eager to isolate operating units from the parent company’s woes.
AIG was badly burned by a financial product unit’s foray into mortgage investments that nearly drove the company into bankruptcy before being rescued by a $180 billion U.S.-government bailout.
For now, AIG’s property/casualty arm is going by the name AIU Holdings, in keeping with a name that has long been used by AIG outside of the United States, said Liddy.
“Foreign general (the non-U.S. business) is holding up really quite well, and it has traveled under a name, AIU, that is independent from AIG,” said Liddy in an interview at AIG’s downtown Manhattan headquarters.
Business is not as strong at AIG’s U.S. commercial insurance business, with the economic downturn shrinking demand.
“There is not much new business,” Liddy said, adding that slack demand for commercial insurance is being felt across the industry. Liddy expects the stimulus package to eventually boost demand.
Insurance buyers have also been more skittish since massive mortgage losses nearly toppled the institution.
“We have found that insurance buyers still want AIG in the mix, but they don’t want us to have 100 percent of their risk. Now we may get 60 percent or 75 percent,” said Liddy.
“They are spreading the risk” among more than one carrier, he added.
Last month, AIG removed signs outside its property/casualty offices as part of its plan to change the operation’s name.
The 90-year-old AIG has become the scorn of America after taking the financial rescue package from U.S. taxpayers. About $80 billion of the $180 billion is loans that the company is working to repay. (Reporting by Lilla Zuill; Editing by Brian Moss)
Was this article valuable?
Here are more articles you may enjoy.