AIG to Sell Shares in AIA to Stay Afloat

Sources say that AIG has decided to sell shares in AIA, its Asian life insurance unit, in 2010. Takingthe route of selling an estimated 30% of the divisionis said to hopefully raise $8 billion for the company, which has continued to struggle after receiving four federal bailouts.

Why Sell AIG?

According to the CEO of AIG, the company is in a position to have to pay back government debt that has reached $182 billion dollars. Other companies will be eager to get in on the action because there are limited options for investment in insurers that have Asia-wide exposure, and AIA currently has more than 20 million customers in Korea, India, Australia, Singapore, Malaysia, China, Thailand, Vietnam, and Indonesia.

Choosing Underwriters

At this time, the company is in the process of sifting through potential corporate buyers. There were talks at the beginning of March as well; however, the bids were too low to consider. Now, Morgan Stanley is reportedly one of the companies ready to get in on the action. Also, Manulife Financial Corp., Prudential Plc, and Temasek Holdings Pte. have shown interest. AIG plans to list the unit again on the Asian exchange to see if there are any takers. And it will begin taking steps to separate AIA and its managers from AIG.

AIG is also looking to sell Alico (American Life Insurance Co.), which operates in over 50 countries, including parts of Europe and Latin America. The hope is that by selling parts of these companies, AIG will be able to pull itself out of debt and eventually re-emerge as a major insurance force.

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