PE Firms Among Those Circling AIG’s Asian Assets

MANILA, Oct 6 (Reuters) – American International Group (AIG), crippled by losses related to bad mortgages, said it had received offers for its Philippine insurance businesses and announced plans to sell its Thai consumer finance units.

 

Once the world’s largest insurer, AIG (AIG.N) said on Friday it would focus on its main insurance operations and put the rest of its businesses up for sale to repay up to $85 billion borrowed from the U.S. government.

 

The Philippine unit of AIG said on Monday it received offers to buy the Philippine American Life and General Insurance Co (Philamlife), the country’s biggest insurer, from around 10 local and foreign investors, including private equity.

 

“I would say these are very respectable groups, also successful groups, which is why it is very encouraging for us,” said Jose Cuisia, Philamlife’s chief executive told reporters.

 

He said he was not aware if there were others who had separately approached AIG’s advisers, Blackstone Group LP (BX.N) and J.P. Morgan Chase & Co (JPM.N), with an offer for Philamlife, which had total assets of 170 billion pesos ($3.6 billion) and consolidated net worth of 49.5 billion pesos as of end-2007.

 

Separately, the head of AIG Retail Bank in Thailand, Charly Madan, announced plans to sell the bank, which has 11 branches in Thailand, and which has 23 billion baht ($674 million) in assets.

 

“We have got many big global corporations and financial institutions showing their interest in getting involved,” he said.

 

Sorasit Soontornkes, a Bank of Thailand assistant governor, said the share sale required no approval from the central bank if the foreign holding in AIG Retail Bank was kept at 49 percent.

 

“The financial status of AIG retail bank is strong because its BIS ratio is now 25 percent, the highest in the Thai bank industry,” he told a news conference, referring to its Bank of International Settlements capital adequacy ratio.

 

Elsewhere in Asia, Taiwan’s financial regulator, the Financial Supervisory Commission, said it aims to protect the rights of investors and customers of AIG’s Taiwan units, which include a securities brokerage, asset management firm and its Nan Shan Life Insurance Co.

 

The regulator said AIG has promised not to move Nan Shan assets out of Taiwan without necessary government permission, and that Nan Shan and AIG’s other units will continue to conduct business in a usual and legal fashion.

 

Speculation has been rampant that AIG might sell Nan Shan, which has been profitable in past years, to raise cash to repay its government loan, which carries a high interest rate and fees, within 2 years.

 

Nan Shan, which competes in Taiwan with Cathay Financial (2882.TW) and Shin Kong Financial (2888.TW), said last month its parent had no plans to sell it, although private equity firms in particular are believed to be circling the company.

 

DOWNGRADES

 

Last week AIG said it would keep its U.S. property and casualty, and foreign general insurance businesses, and an ownership interest in its foreign life operations, which generated nearly $40 billion in revenues in 2007.

 

Philamlife notched up a 14 percent increase in sales to 36.7 billion pesos last year, while Thailand’s AIG Retail reported net profit of 172 million baht in the first six months of this year.

 

AIG Chief Executive Edward Liddy said he didn’t expect a fire sale, adding that buyers would have to assume the debt of the businesses they acquire.

 

But Moody’s Investors Service cut AIG’s debt ratings by one notch, saying the company’s plan to sell assets has left it with fewer businesses to rely on.

 

Standard & Poor’s revised the outlook on its ratings of AIG to “negative” on Friday and said it is more likely to downgrade the company over the next two years.

 

American International Assurance (AIA), the Thai life insurance unit of AIG, said its Hong Kong-based parent was considering selling some shares in AIA., but AIA would continue operations in Thailand and retain a majority stake.

 

“The potential share sale is possibly in the range of 1 to 49 percent,” Thomas James White, executive vice president of AIA in Thailand, told reporters in Bangkok.

($1=47.4 pesos) ($1=34.36 baht) (Reporting by Karen Lema in MANILA, Manunphattr Dhanananphorn, Viparat Jantraprap and Boontiwa Wichakul in BANGKOK, Rachel Lee in TAIPEI; Writing by Louise Heavens; Editing by Ian Geoghegan)