AIG asset sale beginning to pay off, according to New York insurance regulator
New York insurance regulator Eric Dinallo said on Tuesday that AIG CEO Ed Liddy's efforts are beginning to pay off, as AIG seeks to sell assets to pay back bailout loans.
Dinallo, who is AIG's main regulator, vouched for Liddy's efforts on the sidelines of an industry event late on Tuesday, according to news agency Reuters.
Some lawmakers have criticised Liddy for AIG's hosting of a costly executive retreat and a decision to pay retention bonuses to ward off staff defections.
"Edward Liddy has to make decisions...and he should not be second guessed," Dinallo told reporters.
Dinallo said that nearly four months into the job Liddy was already engaged in transactions that would help the insurer pay back massive bailout loans from the US government.
AIG has in recent months lost key employees, including Kevin Kelley, who left his role as CEO of AIG's subsidiary Lexington in order to become CEO of Ironshore. Peter Eastwood is the new president and CEO of Lexington.
To date, Liddy has reached agreements for the sales of a Canadian life insurance business for $308 million, U.S. specialty insurer HSB Group, a private bank in Switzerland and untangled several partnerships.
In some cases proceeds have not been disclosed, but the total pricetag for AIG's major asset sales barely tops $1 billion.
More asset sales are expected, including a large chunk of its life insurance operations, an asset management division, and what has been a highly profitable aircraft leasing business, to raise funds to repay a $60 billion loan, which is part of a total bailout that ballooned to about $150 billion in November.
"The sales should not be fire sales," said Dinallo on Tuesday.
Under revised terms for the government loan, AIG has up to five years to sell off assets, up from two years it was first given to repay borrowings.
Even with a longer horizon to repay taxpayers, and signs that its sale process is gaining steam, analysts say AIG's future is not assured.
"How quickly AIG's forced asset sales proceed and whether the government's position in AIG's capital structure is subject to change each remain unquantifiable issues that could unlock or suffocate value," analyst Joshua Shanker said in a note to clients on Tuesday.