AIG sells Asia branch to pay back bailouts

TEXT OF STORY

JEREMY HOBSON: In Hong Kong today the Asian Life Insurance arm of AIG went public bringing in almost $18 billion. That’s about one tenth of the money AIG owes U.S. taxpayers for the federal bailout of the insurance giant during the financial crisis two years ago. Marketplace’s Mitchell Hartman is following the story for us this morning and he joins us now live.

Good morning.

MITCHEL HARTMAN: Hi Jeremy.

HOBSON: First, tell us what AIG is selling off here?

HARTMAN: Well, long before AIG was a financial basket case collapsing from bad derivatives and all that, it was just a really big profitable insurance company. And one of its crown jewels is a century-old subsidiary in Asia selling insurance in booming markets like China. Now remember, AIG got the biggest bailout of any private company, as much as $180 billion. So it’s selling stuff off to pay that back. Today’s IPO raised nearly $18 billion, as you said. It was the biggest ever for the Hong Kong, the third biggest in the world.

HOBSON: Wow, And how close does this sale by AIG get the company to paying U.S. back taxpayers?

HARTMAN: AIG’s already paid back about $4 billion from selling its airline leasing business. Now it’ll be able to pay back a bigger chunk. But mostly we’ll recoup our money when the government sells off its AIG stock-the Treasury now own 80 percent of the company. Bank analyst Bert Ely explains.

BERT ELY: As it gets is problems behind it, the earning power of the remaining pieces of AIG are reflected in the price of the AIG stock. Then the government sells its shares, hopefully at a profit to the taxpayer.

HARTMAN: It’s the same plan for GM and Citibank, which might also turn a profit in the end for taxpayers.

HOBSON: Okay Marketplace’s Mitchell Hartman, thanks.

HARTMAN: You’re welcome.