It looks like some of American International Group Inc.'s asset sales may have
stalled due to the economic conditions and because potential buyers are having a hard time financing deals. In a speech in Hong Kong Thursday, AIG's CEO Edward Liddy said he was meeting with potential bidders in January, but that the pace and the order of the asset sales may vary and could take months or longer to complete. Liddy was addressing
reports that said AIG would sell assets by the end of the year.
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Since it's $152
billion U.S. government bailout, AIG has been looking to shed assets
around the globe and has a five-year time limit to do so. The problem is that although AIG's assets could be attractive
to many potential bidders, the financing for the deals and rumors of
"fire sale" prices are taking their toll on the sales, according to Liddy.
Still, reports concerning the sale of AIG's assets say that they have been progressing.
According to the Financial Times and several other sources, the insurer
is in talks
to offload its U.S. personal-lines business and could also divest Hartford Steam Boiler. AIG may have found buyers for two of its Japanese life insurance businesses,
Reuters reported on Tuesday. And China Life Insurance Co. Ltd.
is rumored to be acquiring AIG's
assets in Asia, AIA. No formal announcement has been made, but
Munich Re was rumored to be one of 30 bidders for the assets.
Below is an exerpt from today's Liddy's speech in Hong Kong and an update from him on the company's divestments:
I personally believe - and profoundly hope - that "we" who are charged with the joint responsibility of ensuring that the global financial system operates properly is the cooperative effort of private and public sector leaders from all over the globe.
But let me talk for a moment about where AIG goes from here. In this period of uncertainty around the world, it is inevitable that there will be rumors - sometimes spread by those with a vested interest in making certain outcomes a reality. There is no doubt that AIG has been a centerpiece of many rumors of late. Some of the rumors are rather remarkable. My advice is simply this: Be wary. When we have developments to report or if our plans change, we intend to report them. But if a report emerges that does not originate with AIG, I would ask you to maintain a healthy skepticism. In the meantime, let me give you some facts.
Our strategy is to divest assets and become a more focused enterprise. Our focus in the future will be on our worldwide property casualty businesses with a continuing interest in our Asia life business. These are challenging times to undertake divestitures and it's quite possible that the pace or order of our divestitures will change. Nevertheless, I have made the very public commitment that we will pay down the entirety of the amounts we have borrowed from the U.S. taxpayers.
We have previously announced our intention to maintain a majority ownership in AIA but to sell a minority stake of up to 49%. AIA is the leading life insurer in Southeast Asia. Anyone who takes the ferry across Victoria Harbor can't help but notice the AIA signs on Stubbs Road and in Quarry Bay. Other key Asian properties we will be seeking to divest in their entirety include ALICO, AIG Star and AIG Edison.
Assets like AIA and ALICO are businesses that are available only once in an executive's lifetime. They simply could not be re-created today. We expect leaders who want to transform their businesses in Asia will be most eager to bid on these assets.
The U.S. government has put a five-year timeframe on our arrangements. Thus, we don't need to hold a "fire sale." We are committed to identifying buyers that will honor our values and recognize the contributions of our people. At the same time, we want buyers for these businesses who can provide the capital and leadership necessary to exploit the remarkable opportunities that the Asian economy promises for the businesses. We expect to entertain fully valued offers for our Asian businesses - and indeed, for many premier businesses around the globe.
Paula Reynolds, who recently joined AIG as Vice Chairman, is here today with me and is leading our divestiture and restructuring process. Now that we have made progress on the structure of our support from the Treasury and Federal Reserve, we are beginning to execute transactions. We recently announced several divestitures, including sales of our private banking business, a stake in AIG's Brazilian joint venture, and a divestment in a U.S. energy company. We expect more announcements in the weeks ahead. Given the size and complexity of our businesses, however, please recognize that announcements on these businesses are a couple of months or more into the future.
Meanwhile, I'm working to ensure that AIG continues as a viable, competitive business that provides value to our stakeholders. Like all businesses around the globe, we are being extremely cautious with expenses and major new investment commitments, but will continue to support our worldwide enterprises. In addition, AIG is engaged in improving transparency - not as a penalty, but as a necessity for the good of all stakeholders - working with regulators regarding issues of capital adequacy, appropriate accounting treatment during times of market disruption, and risk management metrics. This is the recipe for a holistic approach for reigniting confidence in us and contributing to the restoration of well-functioning markets.
- Maria Woehr
