AIG Creates AIU Holdings; Prepares for Potential Sale of Minority Stake

April 21, 2009

American International Group, Inc. (AIG) today took the first steps to position the rebranding of its insurance units as an independent entity, AIU Holdings, by transferring the company to a special purpose vehicle (SPV) in preparation for the potential sale of a minority stake in the business, which ultimately may include a public offering of shares, depending on market conditions.

This is the first step in the process that was announced on March 2 that will result in AIU Holdings’ having a board of directors, management team and brand distinct from AIG.

Under the plan announced on March 2, AIU Holdings will serve as the holding company for AIG’s Commercial Insurance, Foreign General Insurance, and Private Client Group units.

“Placing AIU Holdings into an SPV marks the latest significant step to position our strong insurance companies as independent businesses, which will benefit all stakeholders, including policyholders, employees, and distribution partners,” said Edward Liddy, chairman and chief executive officer, AIG.

Under the SPV arrangement, AIG intends to contribute the equity of AIU Holdings into an SPV in exchange for preferred and common interests in the SPV.

AIG also intends to purchase from AIU Holdings its equity interests in International Lease Finance Corp., United Guaranty Corp., and Transatlantic Holdings, Inc. The sale of these interests to AIG further separates the property casualty operations from AIG and its other affiliates.

“Taken together, these actions accelerate the move of AIU Holdings toward greater independence,” said Kristian P. Moor, president, AIU Holdings, Inc. “Securing the value of these well capitalized insurance companies, which had net written premiums of about $36 billion in 2008 serving millions of clients around the world, is in the best interests of policyholders and the American taxpayer.”

The Federal Reserve Bank of New York called the move “an important next step in the company’s efforts to place key business units in the best position to optimize their operations and maximize their value.”

The Fed said it is in the “best interests of the American taxpayers, the company and its customers and employees that these efforts succeed.”

The officials said AIU Holdings has also begun a review of its holding company and subsidiary brands aimed at distinguishing these businesses from AIG.