AIG to keep core insurance, sell assets to pay U.S. loan

By Juan Lagorio and Lilla Zuill

NEW YORK (Reuters) - American International Group Inc (AIG.N), crippled by losses on bad mortgage bets, said on Friday it will focus on its main insurance operations and put the rest of its businesses up for sale to repay up to $85 billion borrowed from the U.S. government.

The company, whose shares soared by as much as 24 percent before sliding into negative territory in late trading, said it would keep its U.S. property and casualty, and foreign general insurance businesses, and an ownership interest in its foreign life operations, which generated nearly $40 billion in revenues in 2007.

"Literally, everything else that doesn't fit under that definition we are considering for sale," said AIG Chief Executive Edward Liddy on a conference call with analysts.

Liddy said he didn't expect a fire sale, adding that buyers would have to assume the debt of the businesses they acquire.

"I want to balance speed with value. ... We have a number of buyers interested," Liddy said in an interview with Reuters.

Among the assets AIG may sell are aircraft leasing unit International Lease Finance Corp (ILFC) and its stake in reinsurer Transatlantic Holdings Inc (TRH.N).

It could also sell parts of American Life Insurance Co (ALICO), which operates as a life insurer in more than 55 nations and regions, and a minority stake in American International Assurance Company Ltd.

AIG, which had 116,000 employees in 130 countries at the end of last year, also said it was working on alternatives for its financial products business and securities lending program.