American International Group Inc. may sell its AIG Hawaii unit to pay off an emergency $85 billion federal loan. The local unit is part of the AIG Personal Auto Group, which the New York-based insurer has listed for sale.
AIG Hawaii President Robin Campaniano said the parent company may pay off the loan selling other assets and it remains to be seen if his company is sold.
“Who knows what’s going to be first, what’s going to be second?” Campaniano said, noting it remains business as usual for the local operation.
AIG CEO Edward Liddy announced the week of Oct. 6-10, 2008 his intention to sell units and remake the company as a smaller, profitable operation.
Liddy said the company will sell its life insurance and retirement operations in the United States. He said it may also sell its plane-leasing unit, U.S. auto insurer and reinsurance business.
AIG Hawaii is the third-largest auto insurer in the state and employs more than 300 people statewide. Affiliated companies in the state include Hawaii Insurance Consultants and American Pacific Insurance Co.
American Pacific has sent out a memo saying AIG Hawaii is a “crown jewel” within the AIG Personal Auto Group and that it sees the company remaining strong no matter what happens.
A sale of AIG Hawaii, which has an “A+” financial rating from Standard & Poor’s, would require approval by state Insurance Commissioner J.P. Schmidt. He said any buyer will have to prove it is financially capable of taking over the unit.
“They have to show they would have the financial wherewithal to carry on the business and that it would be a beneficial transaction to the state of Hawaii,” Schmidt said.
Liddy said he would prefer “brand-name” buyers who are capable of buying large portions of AIG so the transactions would move quickly and benefit customers and employees.
Campaniano said he believed the local unit will do well no matter what happens. If it isn’t sold, it will remain part of a smaller, but stronger parent company.
“I think we’re going to come out a winner,” he said.