Bidders eye AIG unit as $60-b loss looms
Agencies NEW YORK AMERICAN International Group Inc (AIG) received bids from MetLife Inc and Axa SA for a life-insurance unit spanning more than 50 countries, Bloomberg reported, quoting three people familiar with the situation. The report said that a sale may mark the biggest step yet in the company’s dismantling. Separately, Reuters reported that AIG is asking for more aid and bracing for a fourth-quarter loss of roughly $60 billion. This would be the biggest quarterly loss in corporate history. Reuters also said that AIG would consider a bid for a majority stake in American International Assurance Company Ltd (AIA), should buyers submit a compelling offer. That would mark a significant shift for AIG, which had been determined to cap the stake sale of its Hong Kong-based subsidiary at 49%. MetLife made a preliminary offer of $11.2 billion for American Life Insurance Co (Alico), a price that may drop to about $8 billion because of deterioration in the unit’s financial condition, said the people, who declined to be identified because negotiations are private. A rival bid from Axa excludes operations in Japan, Alico’s biggest market, the people said. Forced to auction off dozens of business units to repay part of a $150 billion government bailout, AIG may shelve the Alico sale or issue shares to the public if it doesn’t find a buyer at the right price, one of the people said. AIG is selling insurance subsidiaries amid a global stock-market rout that pushed the Standard & Poor’s 500 Life & Health Insurance Index down 73% in the past year. * BRACING FOR MEGA-LOSS *The expected $60 billion loss would exceed Time Warner’s $54 billion single-quarter loss in 2002 and dwarf the $24.5 billion loss AIG posted in the third quarter, when the government increased its rescue package for the insurer to about $150 billion. The latest round of talks with the government include the possibility of additional funds for the insurer and trading debt for equity, Reuters quoted another source as saying. The situation is fluid and other options are being discussed, this second source said, adding that it was unclear where the talks would lead. “AIG’s future is in the hands of the government now,” said Mitsushige Akino, who oversees about $430 million as chief investment officer at Ichiyoshi Investment Management Co in Tokyo. “It’s too big to fail so the best scenario is to separate the businesses that are still functioning, like Alico, and leave the main AIG to take all the bad parts and receive the US government help.” * FIVE CONTINENTS * Christina Pretto, a spokeswoman for New York-based AIG, declined to comment, as did Peter Stack, a spokesman for New York-based MetLife, and Emmanuel Touzeau of Paris-based Axa. For MetLife, already the largest US life insurer, adding Alico would bring customers on five continents, from the UK to Japan. Robert Henrikson, MetLife’s chief executive officer, said in December his firm was in an “amazing position” to pursue takeovers. * LOOKS THAT CHILL **AIG had posted $24.5 billion losses in Q3, which was a record ** $60-billion loss would be biggest quarterly hit in history **If the AIG life unit sale goes through, it will be the biggest step yet in the co’s dismantling ** MetLife’s initial offer of $11.2 billion may decline to $8 billion as the unit has fared poorly * --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
