AIG: Finally, A Pay Day For US Taxpayers

A deal for UK insurance company Prudential to buy AIG’s (AIG) large Asia insurance firm for $35.5 billion will be announced today. That should be a relief for US taxpayers who have invested $182 billion in the AIG bailout. Most of the proceeds of the sales should go directly to the New York Fed.

Taxpayers could ask why AIG has not been more dutiful in selling some of its other assets.

AIG still has one of the largest commercial aircraft leasing businesses in the world. It also has a property and casualty business and its core life insurance and retirement services operations. It is hard to make the case the an aircraft leasing operation and retirement services business should reside under the same roof, but they do.

It is not clear whether AIG management has been slow in divesting some of its more valuable assets to get money back into the hands of taxpayers or whether the Fed has been inconsistent in putting pressure on AIG to divest the parts of the company which are likely to give the best returns. Either way, it is taking too long. Wall St. is “deal happy” again. The corporate shoppers are out in force, and there are financial services companies in Asia and Europe that have access to capital.

AIG’s management needs a push.

Douglas A. McIntyre