AIG To Put Unit ‘For Sale’ Signs Up Within Days, Says CEO

The new chief executive officer of American International Group said within 10 days or less he hopes to list some company units for sale and complete some transactions as the firm acts to pay off an $85 billion government bridge loan.

“I hope in the next seven to 10 days to be out there with a plan that lists everything that’s for sale, and maybe even execute some of those transactions by then,” said Edward Liddy in an interview with Maria Bartiromo on CNBC.

Mr. Liddy, who was CEO and chairman of Allstate until 2006, was appointed to succeed Robert Willumstad Thursday as part of the changes the Federal Reserve Board ordered in its decision to loan the New York-based insurance conglomerate up to $85 billion for up to two years to resolve its liquidity crisis.

AIG confirmed today that Mr. Willumstad had turned down a $22 million severance package. “He stepped up to help AIG under difficult circumstances and we greatly appreciate his efforts,” said a spokesman.

Mr. Willumstad had been in the process of a company reorganization that followed the company’s decision to write off $11.1 billion in credit derivatives linked to the housing market. He was removed before he could deliver a progress report to investors that had been planned for Thursday.

Mr. Liddy said the company will sell off its most valuable assets that can be “digested by buyers in relatively manageable bits.”

He said AIG’s airplane leasing business, International Lease Finance Corp., would be an “interesting” business to sell, remarking that there was “an awful lot of leverage on it.”

Mr. Willumstad had fought to keep the leasing firm with the company after ILFC CEO Steven Udvar-Hazy was reported to have been exploring a possible split in May when AIG financial ratings ran into difficulties. Mr. Liddy said he spoke to Mr. Udvar-Hazy when he was first appointed and would speak with him again today.

Mr. Liddy ruled out sales involving AIG’s core insurance business, saying that portion of the firm “is sacrosanct.”

He spoke out to reassure policyholders, saying their policies are safe and that AIG’s regulated insurance companies are well capitalized.

The company hopefully will not need to make use of the government’s full line of credit, but it will depend on markets, Mr. Liddy noted. “The goal is to pay it back as quickly as possible,” he said.

His comments about the insurance entities’ solvency were backed up by New York Insurance Superintendent Eric Dinallo, who issued a statement reassuring consumers that AIG's insurance companies “are financially sound, with substantially more in assets than they need to pay all valid present and projected claims.”

"Don't worry, and don't make any rash decisions if you have a policy issued by an AIG insurance company," Mr. Dinallo said. "All your covered claims will be paid and all your annuity checks will come. Making sure insurance companies are solvent and able to pay every valid claim is my number-one job, and the AIG insurance companies are strong and solvent.

"If you have a life insurance or annuity policy and someone tells you to replace it because of the troubles at AIG's parent company, call the Insurance Department immediately at 1-800-339-1759," Mr. Dinallo said. "Replacing or liquidating a life insurance policy or an annuity can have heavy hidden costs and tax consequences.”

Mr. Dinallo is in charge of a National Association of Insurance Commissioners task force created to expedite approval of the sale of AIG assets.

He noted that AIG troubles are largely with AIG's non-insurance parent company, which is not regulated by the states and “therefore not held to the same investment, accounting and capital adequacy standards as its state-regulated insurance subsidiaries. The insurance subsidiaries are solvent and able to pay their obligations.”

In a letter to the editor of the Financial Times, he noted that the AIG holding company is regulated by the federal Office of Thrift Supervision.