AIG Divestments Continue

In it’s ongoing effort to right its financial ship, New York-based American International Group Inc. (AIG) has sold another operating unit.

AIG and New York-based Fortress Investment Group LLC announced an agreement under which Fortress will acquire 80% of American General Finance Inc., AIG’s consumer credit division. AGF specializes in providing sub-prime credit to customers in the United States, Puerto Rico, the Virgin Islands and the United Kingdom. Founded in 1920, AGF has assets of approximately $20 billion and liabilities of approximately $18 billion, including $17 billion of debt. Though terms of the transaction were not disclosed, The Wall Street Journal reports Fortress paid only "a small fraction" of AGF's $2 to $3 billion in equity.

"This transaction marks another important step in our ongoing restructuring process as we seek to monetize non-core assets and pay back U.S. taxpayers," AIG President and CEO Robert Benmosche said in a statement. "In Fortress, we have found an excellent partner for this terrific franchise. We believe in AGF's solid business model, which is why we are retaining a 20% stake in the business as part of this transaction."

On the heels of the sale, Fitch ratings confirmed its BBB rating on AIG’s unsecured senior notes. “Fitch’s recent rating actions on AIG have contemplated a potential sale of AGFC as part of the company’s broader restructuring efforts focused on reducing leverage and concentrating on its core insurance operations,” Fitch said in a research note.

Subject to regulatory approvals and customary closing conditions, the transaction is expected to close by the end of the first quarter of 2011.