AIA’s parent company seeks to raise cash to repay loan
AMERICAN International Group, the United States-based parent of AIA Singapore, said it planned to sell its life insurance operations in the US, Europe, Latin America, South Asia and Japan to raise cash to repay a loan from the Federal Reserve Bank of New York.
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AIG will refashion itself into a global property and casualty insurer with a stake in an overseas unit that sells life policies in China, Korea and India, chief executive officer Edward Liddy said in a conference call, according to Bloomberg.
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The New York Federal Reserveextended a US$85-billion ($123-billion) loan to AIG on Sept 16 to ensure it had sufficient liquidity to meet its needs.
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AIG said it had drawn down US$61 billion of the facility as at the end of last month.
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The asset sales will also help it address problems with the capital structure. The insurance giant was brought to its knees the weekend of Sept 13 to 14 because of credit downgrades and writedowns tied to the US housing slump.
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In Singapore, AIA president Mark Wilson said in a statement last night that the announcement meant that AIG would retain a majority interest in the AIA companies, which hold the life insurance business in Asia. AIG operates a general insurance business in Asia under the AIG name.
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“The introduction of one or more minority investors will ensure the AIA companies’ ability to grow to their full potential in future years,” said Mr Wilson.
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Mr Liddy said he prefers to sell “large slices’’ of AIG to “brand-name’’ companies because that strategy will hasten sales and benefit customers and employees.
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AIA is a wholly owned subsidiary of AIG. If AIG decides to sell its Singapore operation, it would have seek approvals from the Monetary Authority of Singapore, which would look at, among other things, the capital structure of the buyer.
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Toronto-based Manulife Financial Corp is reportedly one of the suitors for the Asian assets of AIG. AIA Singapore’s former general manager Mark O’Dell left the company on Sept. 18 to head Manulife’s Taiwan operation.
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AIA officials had previously said the Asian operations are the “jewel in the crown” of AIG and would not be sold.
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AIA Singapore has more than 1 million policyholders and 2.8 million policies in force. As at Sept 22, AIA Singapore had total assets valued at $24 billion, including five buildings. AGENCIES
