American International Group Inc. (NYSE:AIG) has received preliminary offers for its Asian unit, and not surprisingly the offers are apparently falling short. If asset sales were hard before, then they are only going to get harder for AIG after its fourth bailout.
Prudential plc and Manulife Financial Corp. apparently bid for AIG's Asian unit, according to Reuters.
AIG wants between $20 billion and $40 billion for American International
Assurance Co., depending on
the size of the stake, but Reuters describes the offer as "modest." China Life Insurance Co. Ltd., which was rumored to be interested in the
asset, pulled out of the bidding.
Continue reading below
The deal, of course, would be for around 49% of AIA because the U.S. government has preferred ownerships
in the rest of it as part of the most recent bailout deal.
AIG is also weighing other alternatives, including a full or partial initial public offering for the unit.
The insurer's attempts to sell the business has moved very slowly, and overall it's asset sales have been difficult because valuations are rough to gauge as the economy worsens and most potential buyers need capital themselves. Even though the government is determined to keep AIG's asset sales open
for fear the financial system might collapse if the insurer fails, the New York Liquidation Bureau, which manages more than 60 insolvent insurers on the state's behalf,
told Crain's they are ready "for anything." Most recently the bureau has restructured Midland Insurance Co. and put it on the block.
- Maria Woehr
Comments
Let AIG crumble and let a new industry or a new insurer take its place. They are not so important that they are indispensible. Issue discussed further detail here: http://www.ricoexplainsitall.com/politcs-economy/2009/3/4/the-irrational-aig-bailout.html