AIG puts US life, pension and retirement business on the block

In an announcement today by AIG Chairman and CEO Ed Liddy, it was revealed that AIG has put their US life, pension and retirement businesses on the block as part of their effort to pay off the $85 billion federal loan that saved them from filing Chapter 11 last week. In a late morning press conference with analysts Liddy outlined a plan for AIG that included sale of the aircraft financing unit, it's financial products division, the US personal lines companies, US life, retirement and pension business and some other assets. The reshaped AIG according to this plan would center around it's commercial property casualty business in the US, international subsidiaries and the immensely profitable international life insurance operations.

While the details remain to be seen as to what companies have the interest and funds to close this deal, it's quite clear that the US life insurance arms of the AIG empire are going to be sold to the highest bidder. What life markets would this cover and which one's, according to this company report, would be for sale?

Well, a review of the list of the big names on the life company list would include:

AIG Annuity Insurance Company

AIG Life Insurance Company

AIG SunAmerica Life Assurance Company

American General Life Insurance Company

American Life Insurance Company

SunAmerica Life Insurance Company

The Variable Annuity Life Insurance Company

Obviously, this would seem to imply, if we take the company at it's word after todays announcement that the structured settlement arm would be in a position where the internal settlement program that directed settlement funds from the AIG personal and commercial lines divisions could be put out to pasture. While the P&C side might stay intact, the in house placement of annuity business would come to an end due to the fact that their would no longer be an "in house" life market to direct business toward.

While this might seem to spell the end of structures through AIG as it is currently managed, that isn't necessarily the case. It would appear the US commercial lines and excess/surplus carriers would remain intact, and thus stay as a powerful force in the settlement of a wide range of casualty lines of business. Additionally, it is entirely plausible that any purchasor of American General or AIG Life would want to retain their structured settlement operations as it's highly profitable and a big premium generator.

What is in doubt is the future of the coordinated program that encourages AIG P&C companies to actively suggest structured settlements to their claimants. Regardless of your feelings about AIG there is no question they are a big generator of structured settlement business and awareness of the concept and to lose their advocacy of the concept would be a big blow for the structured settlement industry and NSSTA.

Stay tuned, lets see how it turns out, but if you are heavily reliant upon AIG P&C for your structured settlement business it is likely there are going to be some uncertain times ahead.