In the latest AIG news, unnamed sources told the Times that MetLife made a preliminary offer of $11 billion for Alico, another foreign unit of AIG, but might lower it to $8 billion, and that AXA also made a bid. But the money on the table would not be enough to make up for possibly $60 billion in fourth-quarter losses that could trigger a credit downgrade and a cascade of losses across a web of trading counterparties.
The option of the government taking direct ownership of AIG businesses would put it "in the incongruous position of owning one or more insurance companies and competing with insurers in the private sector," reports American Banker (AB) in its Morning Scan.
AB’s Morning Scan also reports that The Wall Street Journal said that HSBC and AXA and a number of other prospective buyers are no longer in the running for the auction of American International Assurance, AIG's "Asian crown jewel," for which bids are due Friday. Unnamed sources said "there may be no offers at all," but AIG said it knows "there will be multiple bidders."
The sale "has become a symbol of a troubled auction process and unrealistic expectations that will only deepen AIG's entanglements with the Fed in the years ahead." Unnamed sources said one option "would be to bring in a partner, or 'toe-hold' investor, who would take a minority stake in the business at what AIG considers a fair market valuation. The Obama administration could take ownership of the rest of the company and hold onto the stake until market conditions permit an initial public offering of stock."
"Heard on the Street" considered the strain AIG places on the government's rescue effort and concluded it could "color the government's thinking as it decides how to deal with Citigroup or Bank of America. If the numbers become unpalatable, investors shouldn't assume that the government can write blank checks forever."
Meanwhile, the company appears to be bleeding its top executives. John Williams, previously SVP of operations at one of AIG's fastest-growing commercial units in the United States, its small business division, is joining Torus Insurance Ltd. as global head of business operations. Hiscox, a specialty insurer, said it hired Steve Silverman to lead Hiscox's newly created U.S. inland marine business. Silverman was AVP and product line manager for AIG's Lexington Insurance's inland marine and specialty property business in the United States and Canada.
