Beleaguered insurer American International Group Inc., parent of Hartford-based HSB Group Inc., could be split into at least three separate government-controlled divisions in an effort to save the business, according to a report today by the Financial Times.
Earlier this week, reports surfaced that New York-based AIG may be asking for its fourth loan from the federal government just days before it is expected to report a fourth-quarter loss.
Once one of the world’s largest insurers, AIG has already received $150 billion in loans from the government. In return the government has taken an 80 percent stake in the insurer.
AIG has an agreement to sell HSB Group, which includes Hartford Steam Boiler Inspection and Insurance Co., to Germany’s Munich Re Group for $742 million.
Under the new proposed plan, the government would swap its 80 percent stake for even bigger pieces of three units that would be split off from the company, according to the Financial Times report citing anonymous people.
Those units would be AIG’s Asian operations, its international life insurance business and its U.S. personal lines business. A fourth unit made up of AIG’s other businesses and troubled assets could be created as well or sold off in pieces, according to the newspaper report.
AIG’s other major operations include its U.S. life insurance business, international property and casualty insurance unit, and its aircraft leasing business.
In return for the breakup, the government would relax the terms, or cancel, a portion of the $60 billion loan that was at the center of AIG’s $150 billion rescue package, the newspaper said.
Details of the plan could come on Monday, when AIG is expected to report a $60 billion fourth-quarter loss, the Financial Times said.
AIG spokeswoman Christina Pretto declined to provide specifics about a potential breakup of the company or losses, but did acknowledge the insurer is reviewing alternatives with the government ahead of releasing its fourth-quarter results.
At 11 a.m., AIG traded at 56 cents, up 10 cents, or 21.7 percent. (AP)
