March 5th, 2012
02:23 PM GMT
Share this on:

Hong Kong, China (CNN) – U.S. insurance giant, American International Group, used to be the world’s largest insurer - until its spectacular fall in the 2008 financial crisis.

Now, AIG is inching back out of the darkness after its $180 billion bailout, the largest in American corporate history.

But the revival has come at a cost. AIG has sold bits of itself, including one of its most valuable possessions in Asia – the region’s third largest insurer, American International Assurance.

AIA was once AIG’s Asian insurance gem. Now, AIG is merely a minority shareholder, and its grip is set to slip even more.

On Sunday, the New York-based insurer said it would sell 1.7 billion shares in its AIA holdings. The company’s goal: To make about $6 billion from as-yet-unidentified institutional investors and fund managers.

In a website statement, AIG explained further in a bit of legalese: “AIG expects to use the net proceeds to reduce the balance due to the U.S. Department of the Treasury...in the special purpose vehicle through which AIG holds AIA shares."

The balance on that “special purpose vehicle” is about $8.5 billion. That means the $6 billion AIG hopes to make from its AIA share sale would put a much-needed dent in its debt.

AIG has come a long way in its repayment plan since 2008, when its bailout effectively put it under U.S. government control.

In 2010, AIG sold about two thirds of its stake in AIA to help pay down its bailout debt. If this week’s share sale goes through, AIG’s remaining stake will drop from a third to less than 15%.

AIG is offloading the shares now to benefit from Hong Kong-based AIA’s good performance.

Over the past year, AIG has lost nearly 20% of its value as its bailout debt weighed on the company. By comparison, AIA’s share price jumped nearly 50% in the past seven months, from its all time low last October. Ten days ago, AIA announced a record 40% increase in new business growth, which is worth more than $930 million.

AIG is moving to capture returns on its Asian investment. Yet it still owes some $50 billion to Washington. Time will tell if the strategy to go from an insurance Goliath to a little David will work.



soundoff (3 Responses)
  1. sameh

    Children enchanted miracle Hallelujah
    http://upload40.com/12319.html

    March 7, 2012 at 2:12 pm |
  2. jakson

    The best site for cooking at all
    http://www.tbkhat.com/

    March 13, 2012 at 12:41 am |
  3. top best insurance companies

    Would be arising joining by these top best insurance companies. This is the top best insurance companies. Where you can join & enjoy your valuable life dangerous moment. You can solve your any types of loss. To overcome in your daily life, business, family maintaining etc. So you need to join our top best insurance companies. Then you can arise all types of losses. This is the best way to conduct everything. I am a member of top best insurance companies. I have got any types of help in these insurance companies. Al least I can say that in your any types of losses…. http://topbestinsurancecompanies.com

    March 18, 2012 at 1:29 pm |

Post a comment


 

CNN welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.

About Business 360

CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.

 
 
Powered by WordPress.com VIP