AIG may need some time to sell assets due to crisis, says Liddy

PUBLISHED : Friday, 12 December, 2008, 12:00am
UPDATED : Friday, 12 December, 2008, 12:00am

American International Group, the giant insurer seeking to sell assets to repay a US$152 billion government bailout package, may face delays because of the global crisis and the time needed to negotiate with investors and local regulators, its chief executive said.

Edward Liddy, addressing the American Chamber of Commerce in Hong Kong yesterday, said the timing of AIG's asset sales might change because of the financial crisis.

'These are challenging times to undertake divestitures,' he said.

Kenny Lee Yiu-sun, chairman of the Hong Kong Stockbrokers Association, said it would be hard to conduct mergers and acquisitions in the current market situation.

'The market has a lack of liquidity. Banks are not willing to lend money for giant deals, while many companies do not have enough liquidity to buy,' said Mr Lee.

'There may be a lot of potential buyers that have a strong interest in buying the Asian units of AIG, but there are few that have the money on hand to complete a big deal.

'It would need to wait until the market sentiment turns better and when banks are feeling more comfortable to lend to buyers.'

AIG, once the world's largest insurer, was rescued by the United States Federal Reserve in September with a US$85 billion loan. That was later revised by the US government and ballooned to a total US$152 billion bailout package.

Mr Liddy, appointed in September by the government to head AIG, accepted a salary of US$1 for this year and next.

He has to find ways to cut expenses as well as seek buyers for AIG's assets so that it can repay the loans to the government.

The company has said it would sell its Alico Japan, AIG Star Life Insurance and AIG Edison Life Insurance units in Asia.

But its non-life businesses, including those operating in Hong Kong and Southeast Asia, are not for sale.

Mr Liddy was in the city yesterday as part of a roadshow in Asian countries including Singapore to meet regulators and investors about the sales.

AIG's operations in the region include Hong Kong, Singapore, Taiwan, Thailand, Indonesia, Malaysia, the Philippines, Vietnam and Macau.

Its life insurance unit, American International Assurance, is the largest life insurer in Hong Kong, and the company is also one of the city's largest general insurers.