New York — In preparation to repay an $85 billion U.S. Federal Reserve loan that allowed it to avoid bankruptcy after taking losses on mortgage derivatives, AIG is expected to auction off assets. The assets could include AIG's operations in Asia, its aircraft leasing arm, stake in reinsurer Transatlantic Holdings, and consumer lending and variable annuities businesses. News outlets expect a list all of the AIG assets that would be put up for sale to be released seven to 10 days.

Reuters reports that AIG may list its international life insurance, foreign general and the domestic retirement business. Some of the big foreign players may be interested buyers in the United States on both life and property/casualty sides, says Credit Suisse Global, Switzerland, according to Reuters.

The brokerage said the asset sales by AIG will benefit Aflac Inc. and Prudential Financial Inc. on the Japanese side, and Prudential UK in the non-Japanese Asian countries.

On the other hand, if China Life were to be the buyer of some, or all, of these properties, this could represent a formidable new competitor, making the benefit more temporary, the brokerage added.

Most experts agree that AIG’s insurance operations are insulated from the losses in the company’s other segments, such as AIG Financial Products. Those losses, related to the unit’s investments in credit-default swaps, brought AIG to the verge of bankruptcy recently before the government came to the rescue.

The company is hoping the loan from the federal government will assuage the concerns of nervous policyholders, and avert a wholesale exodus of its insurance customers.

Sources: TradingMarkets.com and Reuters

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