Liddy Plans To Keep P-C Business At AIG’s Core

American International Group’s new chief executive officer, Edward Liddy, said he plans to keep the core insurance property-casualty business as he decides how to sell off assets to pay a government-backed $85 billion bridge loan.

The comments came yesterday during a global meeting with employees broadcast by phone and over the Internet, a company spokesman confirmed.

According to reports, Mr. Liddy said he plans to rebuild the New York-based insurer into a smaller but much more nimble company by the time the process is finished. He said he does not plan to liquidate the company as he sells assets to pay back the government-backed loan.

Earlier this week, the Federal Reserve extended AIG an $85 billion loan as it suffered a liquidity problem and was close to filing bankruptcy. The action was taken for fear that the company’s failure would rock the global economy to its core and set off a chain reaction that would prove to be an economic disaster.

In return for the loan, the government now owns 79.9 percent of AIG and gave the company 24 months to pay back the loan at an interest rate of more than 11 percent.

Mr. Liddy said he does not have much time to decide which assets to sell, saying there is about a four-week window for making the decision. According to a Wall Street Journal interview with him, he was critical of the interest rates the government is charging AIG, saying it was an incentive to complete the payback as early as possible.

The new CEO, approved yesterday by AIG’s board, was chairman and CEO of Allstate until his retirement in 2006.

A task force led by New York Insurance Superintendant Eric Dinallo and other insurance commissioners will oversee the sale of AIG assets.

AIG policyholders are taking a wait-and-see attitude, said one insurance broker executive. The company is keeping in contact with brokers with updates on the situation, but the information is nothing more than what has been publicly disclosed. He said some policyholders have requested to be placed with other carriers, but most are watching as events unfold.