Troubled insurer American International Group Inc has formed a special-purpose vehicle for its AIU Holdings property-casualty unit, a key step toward selling at least part of that business.
AIG said on Monday the vehicle consists of AIU's commercial insurance, foreign general insurance and private client group businesses. The insurer also named Kristian Moor chief executive of AIU. He was previously president of the unit, and retains that title.
Plans to separate AIU were first announced in March, after New York-based AIG lost more than $99 billion in 2008. AIU, in contrast, was profitable, earning more than $2 billion.
AIU may sell as much as a 20 percent stake through an IPO or in transactions with private investors. An offering could raise several billion dollars for AIG. At the end of 2008, AIU was valued at about $38 billion.
AIG could use proceeds to help repay the U.S. government, which has committed up to $180 billion to rescue AIG, including about $85 billion in loans.
The insurer nearly collapsed last year because of credit default swaps entered into by its financial products unit. These left the insurer on the hook for hundreds of billions of dollars of potential payouts to counterparties.
AIU Holdings recently employed about 33,000 people worldwide, and had more than 40 million customers.
Shares of AIG closed Friday at $12.46. They have fallen about 97 percent in the last year, after taking into account a recent 1-for-20 reverse stock split.
(Reporting by Jonathan Stempel; editing by John Wallace)