Tue, Nov 23, 2010 - Page 10 News List

AIG seeks buyers for rail-car unit in divestment drive

NY Times News Service, CHICAGO

The American International Group (AIG) is shopping around its rail-car unit, a person briefed on the matter said on Sunday. The move would be part of the insurer’s plan to sell non-core businesses to pay down its US$130 billion taxpayer-financed bailout.

The unit, AIG Rail Services, is based in Chicago and has more than 10,000 rail cars and leases, said the person, who requested anonymity because of the confidential nature of the sales process.

Potential buyers could include buyout firms.

In carrying out a plan to free itself from the government’s majority ownership stake, AIG has sold several divisions.

These include the international life insurance units American International Assurance (AIA), the American Life Insurance Co (ALICO) and a consumer lending operation.

The initial offering of AIA raised US$17.8 billion for AIG, while the sale of ALICO to MetLife reaped about US$15.5 billion.

AIG has said that it plans to focus on a global property and casualty insurance business, Chartis, and a domestic life insurance operation, Sun America Financial. AIG Rail Services is a small part of the insurer’s financial services division.

That unit also includes an extensive aircraft-leasing subsidiary, the International Lease Finance Corp, which generates most of the operation’s revenue.

A possible price for AIG Rail Services could not be learned. The firm has hired Bank of America (BOA) to sell the unit. News of the potential sale was first reported on Sunday afternoon by the Wall Street Journal online.

An AIG spokesman declined to comment on the potential sale, saying only that “AIG is committed to repaying the American taxpayers and its transactions are pursued with this in mind.”

A BOA spokesman declined to comment.

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