AIG not decided on Asia unit’s future: sources

By Paritosh Bansal

NEW YORK (BestGrowthStock) – American International Group Inc (AIG.N: ) CEO Robert Benmosche asked the insurer’s board for time to explore options besides a public offering for its Asian life unit after a $35.5 billion deal to sell it to Prudential Plc (PRU.L: ) fell apart, a source familiar with the matter said.

Benmosche wanted to explore other options for American International Assurance, including selling parts of the business, after the directors on Monday voted down a sale to Prudential on revised terms, the source said on Thursday.

AIG has not yet decided on what it wants to do with AIA, and an IPO, widely seen as the likely option, is not a foregone conclusion, according to sources familiar with the situation, who declined to be identified because these talks are not public.

A date had not been set for the next board meeting on the issue, the first source said.

AIG declined to comment.

AIG, which is nearly 80 percent owned by the U.S. government after a $182.3 billion rescue, was counting on the AIA sale as a big step forward in its efforts to repay taxpayers.

AIA was well on its way to an IPO when Prudential struck a deal to buy it. But the transaction, which was announced in March, soon ran into trouble. Prudential had to ask AIG to first revise the terms to appease its UK regulator, and then again come back for a change as it struggled to get shareholder support.

The British insurer asked AIG to cut the price to $30.4 billion, but it was turned down, leading to the termination of the agreement.

LOSS OF CONFIDENCE

During negotiations over the revised terms, AIG asked Prudential to raise the $30.4 billion offer, but for some directors a more important concern was Prudential’s ability to close on the transaction, according to the source.

Indeed, the board was beginning to lose confidence in Prudential Chief Executive Tidjane Thiam’s ability in general to successfully complete the deal, the source said.

Benmosche had been a proponent of a deal with Prudential and favored accepting the new terms because, even at a lower price, it offered more liquidity and sooner.

In the process, Benmosche has left some AIG directors unhappy with his handling of the transaction, the source said.

But Benmosche, the fourth person to hold the top AIG job since June 2008, is safe in his role, with the board wanting him to stay CEO, the source said.

An important concern for the board is the difficulty of finding another CEO to take on the job of running AIG, according to the source.

Investing Research

(Editing by Muralikumar Anantharaman)

AIG not decided on Asia unit’s future: sources