AIG will sell local division

Brentwood hub part of broad plan to slash debt load

Email | Print By Geert De Lombaerde

The Nashville operations of American International Group are on the block along with several other businesses as the insurance giant looks to regain its financial footing.

The offices of American General Life & Accident Insurance Co. in Brentwood employ about 1,200 people in Brentwood and are a key cog in the company’s U.S. life insurance business. That division is up for sale along with AIG’s retirement and pensions units.

AIG acquired American General – which was then headquartered in Houston – seven years ago after a bidding war with British conglomerate Prudential. At the time, AIG paid more than $20 billion.

AIG will apply the proceeds of upcoming divestitures toward reducing its recently incurred debt as well as solidifying its capital base. New York-based AIG has drawn $61 billion on the $85 billion credit line extended by the government late last month.

In a conference call this morning, Ed Liddy, chairman and CEO of the financial behemoth, said “a strong, viable and nimble AIG will emerge from this crisis.” He called the units being sold “extraordinary businesses that are already proving to be highly attractive to buyers.”

AIG's domestic life insurance business lost $1.9 billion on revenue of $2.5 billion in the first half of this year. In 2007, it booked a profit of $713 million on sales of $4.9 billion. During the second quarter, its parent contributed $1.1 billion in capital to the business to offset investment losses and impairment charges.

Liddy said his team would prefer to sell the life, retirement and pensions units in one deal. “Larger is better,” he said, adding that AIG will “have a clear bias to brand-name companies with strong ratings and strong balance sheets.”

In a note commenting on today's news, insurance ratings firm A.M. Best said "many of the operating units expected to be sold are premier opportunities" but cautioned "that competition for asset sales may be challenged by the lack of credit availability in current volatile markets and potential reluctance of bidders to raise cash through stock dilution."

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