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AIG to unload three life insurance units in Japan

Embattled insurer American International Group Inc (AIG) said it will sell three of its Japanese life insurance businesses.

As part of its effort to pay off a massive US government loan, AIG has decided to unload Alico Japan, AIG Edison Life Insurance Co, and AIG Star Life Insurance Co, the company said in a statement late on Friday.

On the brink of failure last month, AIG was bailed out when the government offered it an US$85 billion loan during the ongoing credit crisis that saw Lehman Brothers Holdings Inc file for bankruptcy protection and the sale of Merrill Lynch & Co to Bank of America Corp. In return for the loan, the government received warrants to purchase up to 79.9 percent of AIG.

AIG, one of the world’s biggest insurers, also said on Friday in New York that it would sell a number of business units around the world, though it did not specifically disclose all the assets being considered for sale or their expected prices.

However, the New York-based insurer said it plans to retain its US property and casualty and foreign general insurance businesses, and also plans to retain an ownership interest in its foreign life insurance operations.

A number of overseas life insurance companies are believed to be interested in buying the three Japan subsidiaries, according to the Nikkei financial daily.

Germany’s Allianz Group and Aegon NV of the Netherlands have shown strong interest in buying the three firms, Kyodo News reported yesterday, quoting unnamed sources close to the deal.

Japan’s top non-life insurer Tokio Marine Holdings was also showing interest and had already started collecting information about their finances, according to the evening edition of the Asahi Shimbun.

Alico Japan is expected to be priced at around ¥2 trillion (US$19 billion), with AIG Star and AIG Edison seen to sell for at least ¥500 billion, respectively, Kyodo reported, quoting its sources.

AIG’s Japan unit said it will retain its casualty insurance operations, in line with the company’s overall plan to refocus on its core property and casualty insurance businesses.

Newly appointed chairman and chief executive Edward Liddy, former CEO of Allstate Corp, said AIG has been contacted by “numerous” parties regarding possible sales of businesses, and AIG will try to sell its operations to “brand-name” buyers who have strong ratings and balance sheets.

“Our goal is to emerge from this process in a timely fashion as a smaller, but more nimble company that is solidly profitable and has attractive, long-term growth prospects,” Liddy said in his first call with investors and analysts. “I think what the Federal Reserve has provided us has been very generous and we are going to do everything we cannot to have to go back to them.”

One unit that analysts have said could be sold is International Lease Finance Corp, which leases out more than 900 aircraft with asset values topping US$44 billion at the end of the second quarter. Another unit that could possibly be sold is consumer-focused lender American General Finance Corp.
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