AIG to focus on property, global gen insurance biz

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Oct 3: American International Group Inc, the insurer crippled by losses on bad mortgage bets, said on Friday it will focus on its property, casualty and foreign general insurance businesses.

The company, whose shares rose 7.5% in premarket trading, said it would sell its remaining businesses and is working on alternatives for its financial products business and securities lending programme to help repay up to $85 billion in borrowings from the federal government.

“We have already been contacted by numerous strong, stable parties, and we expect that buyers will recognise the value of these properties,” AIG chairman and chief executive officer Edward Liddy said in a statement. “Our goal is to emerge from this process as a smaller but more nimble company.” Maurice Greenberg, former chief executive of AIG, who left the company in 2005 following an accounting scandal under the threat of prosecution, has asked Liddy for the chance to bid on AIG assets.

The firm’s worldwide property and casualty businesses generated close to $40 billion in revenues in 2007.

AIG said it had drawn $61 billion on the Federal Reserve facility as on September 30. Once the world’s largest insurer, AIG accepted a federal bailout on September 16 after losses in a financial products unit drove it to the brink of collapse. The deal carries heavy interest and fees, and must be repaid within two years. AIG also suspended dividends on its common stock. The insurer, at the end of 2007, had 116,000 employees in operations throughout 130 countries and territories.

AIG’s shares, which have traded as high as $70.13 last year, fell to $1.25 in the hours before the bailout. The shares closed at $4.00 on Thursday.