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AP
Ahead of the Bell: American International Group
Monday October 6, 9:00 am ET
Analyst unsure how much AIG will receive for selling assets, concerned about capital cushion
NEW YORK (AP) -- An analyst said Monday he remains concerned about insurer American International Group Inc.'s liquidity after its asset sales to help pay back a government loan.
Friedman Billings Ramsey analyst Bijan Moazami said AIG's capital cushion could remain narrow even as it sheds business units to pay off an $85 billion government loan that helped it stay in business last month.
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AIG has drawn down $61 billion of the loan.
"We remain concerned, however, that AIG's capital cushion will remain thin, even after the sale of its assets, as the proceeds will be used to pay back the U.S. government loan," Moazami wrote in a research note.
AIG, one of the world's biggest insurers, didn't disclose all the assets it would sell or the expected prices from the sales. However, the New York-based insurer said it plans to retain its U.S. property and casualty and foreign general insurance businesses, and plans to retain an ownership interest in its foreign life insurance operations.
Moazami noted that AIG's life insurance operations could fetch at least $50 billion if they are sold.
AIG's traditional insurance divisions are widely considered safe. It was AIG's financial services operations, and primarily its insurance of mortgage-backed securities and other risky debt against default, that led AIG to falter and eventually require a government loan to stave off a liquidity crunch that could have put it out of business.
About $54 billion of the loan from the government has gone toward the securities lending and financial products area at AIG, the company said Friday.
Moazami rates AIG "Market Perform" with a $5.30 share price target.
Shares of AIG fell 49 cents, or 12.7 percent, to $3.37 in premarket trading.
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