American International Group Inc (AIG), the insurer rescued by the US government, may be forced to slow the pace of asset sales because of their complexities and the global financial crisis.
“These are challenging times to undertake divesture,” said chief executive officer Edward Liddy at an American Chamber of Commerce lunch in Hong Kong yesterday. “It’s quite possible that the pace and order of our divestiture will change.”
AIG is selling businesses including life insurance, retirement services and an airplane-leasing unit to repay a government loan of as much as US$60 billion. The loan is part of an expanded US$152.5 billion rescue package that spared it from bankruptcy and gave the government a 79.9 percent stake.
AIG has drawn down about US$30 billion of the debt facility. Its asset sales would aim to reduce the debt and to help redeem preferred stock it sold, Liddy said.
“The plan I laid out back in early October I think remains valid today,” he said. “We’re going to pay back the US taxpayers every single penny we owe them.”
The size and complexity of the assets it is trying to sell is a main reason for the uncertainty of the timing, Liddy said. American Life Insurance Co, for example, operates in 30 different countries. Potential investors would need time to conduct due diligence and they would want to ascertain AIG has all the regulatory approval, he said.
“For businesses of this complexity, this breadth and this amount of dollars, it just takes time to get the buyers up to speed,” he told reporters after his speech.
AIG executives have met with regulators in different countries to garner support for the asset sales and have discussed plans with investment bankers, he added. They will meet potential buyers in the US in January, said Liddy, who is visiting Hong Kong, Tokyo and Singapore to meet staff.
In Asia, Liddy reiterated the group is seeking to sell in entirety its American Life Insurance unit, and in Japan, the AIG Star Life Insurance Co and AIG Edison Life Insurance Co operations.
After the sale, it will focus on global property casualty operations and its Asian life insurance business. American Life Insurance, which offers wealth management, retirement planning, life and health insurance, operates in Japan and South Asia in the region, according to its Web site.
AIG agreed to sell its 50 percent stakes in units of energy producer Tenaska Inc back to the company’s employee owners as part of the asset divestment plan.
Early this month, it also announced the sale of AIG Private Bank Ltd, a unit catering to wealthy individuals in Asia and the Middle East, to Abu Dhabi-based Aabar Investment PJSC for 307 million Swiss francs (US$256 million).
More asset sales may be announced soon, Liddy said.