February 24, 2009 / 9:06 PM / in 10 years

AIG may rethink asset sales in tough markets

NEW YORK (Reuters) - American International Group Inc (AIG.N), which is trying to dispose of assets to pay back the U.S. government after a bailout last year, will rethink its sales strategy if tough market conditions keep it from getting a good price for its properties, a spokesman said on Tuesday.

“We are going to receive full and fair value,” spokesman David Monfried said. “If the current market conditions won’t permit that, we will rethink our sales strategy on our important assets.”

AIG, once the world’s largest insurer, said last year it planned to sell all assets except its U.S. property and casualty business, foreign general insurance and an ownership interest in some foreign life operations, as it looked to pay back the government after a bailout that swelled to about $150 billion.

The company has announced some sales but has found it hard to find buyers and get a good price for its assets amid the financial crisis.

Credit for deals remains difficult to come by due to the crisis and many would-be buyers of its assets are dealing with their own problems.

AIG expects to post a fourth-quarter loss of about $60 billion, the biggest in corporate history, and is in talks with the government for further aid, discussing a number of options to deal with its financial issues.

Among the options being discussed under the plan, a $60 billion loan from the government would be paid back with a combination of debt, equity, cash and businesses, the Wall Street Journal reported.

The insurer would continue to try to sell some units but other assets would be given to the government as repayment, the Journal reported.

The assets given to the government would include some of the insurer’s Asian units, the paper said, adding that they could be spun off with the government taking a major stake.

One of the key goals of the new plan is to protect the insurer’s ratings, and the plan was being formed in consultation with major credit-rating agencies, the Journal reported.

AIG was first rescued in September after bad mortgage bets left it on the verge of collapse.

The government stepped in with $85 billion in bailout financing, as the credit crisis peaked with Lehman Brothers Holdings Inc LEHMQ.PK filing for bankruptcy and Merrill Lynch agreeing to be bought by Bank of America Corp (BAC.N). The government subsequently offered additional financing to bring the support extended to AIG up to $123 billion.

In November, the government had to revise its bailout package, raising its support for the insurer further to about $150 billion.

Reporting by Paritosh Bansal; Editing by Gary Hill

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