American International Group (AIG) trimmed its tab to the American people by $25 billion on Tuesday. The insurance company, plagued by fallout from the financial crisis for more than a year, moved two subsidiaries -- American International Assurance and American Life Insurance -- into special units that are used to separate a business from its parent company. A spinoff or sale is the next logical step.

For now, AIG is holding on to the companies and giving the U.S. government preferred equity in the two life insurers. When AIG decides to send the companies public or divest via a private transaction, the feds (and taxpayers) will be able to cash in. Before becoming too optimistic, keep in mind that a timetable hasn't been set.

Continue reading AIG moves two life insurers, suggests a liquidity event

AIG moves two life insurers, suggests a liquidity event originally appeared on BloggingStocks on Wed, 02 Dec 2009 08:40:00 EST. Please see our terms for use of feeds.

Earlier this morning, embattled insurer American International Group (NYSE: AIG) announced that it is going to reduce its outstanding federal loans by $25 billion by giving a preferred stake in two spin-off units to the government. The two subsidiaries, American International Assurance and American Life Insurance, will be spun off into "special purpose vehicles" ahead of initial public offerings. The Federal Reserve Bank of New York will receive interests in the special purpose vehicles (SPVs), both of which will eventually become independent companies after the IPOs are complete.

The $25 billion breaks down like this: the Fed will receive $16 billion in preferred assets in American International Assurance and $9 billion in American Life Insurance. Reportedly, the outstanding debt for AIG will be cut to $15 billion thanks to this move. AIG now has as much as $182.5 billion in funding available from the government, extending the original offer of $85 billion from back in September.

Continue reading AIG will spin off units in order to reduce debt

AIG will spin off units in order to reduce debt originally appeared on BloggingStocks on Thu, 25 Jun 2009 11:40:00 EST. Please see our terms for use of feeds.