AIG Moving (Another) Unwanted Asset

Jacob Harper |

Insurance giant AIG International ($AIG) moved one step closer to finally splitting off their jet-leasing business in a move that could net $4.2 billion. The company has been looking to unload the assets since 2008, when the company first went to in a tailspin as a result of its association with the toxic mortgage-backed CDOs that nearly sunk the global economy.

While AIG has made significant gains on the year, notching a respectable 33.5 percent rise in valuation, the company is still but a shadow of what they once were. The company, now trading around $50 a share, was valued at nearly $2,000 a share in 2000, and was still north of $1,500 just prior to the financial meltdown.

Since the company’s crash and subsequent government bailout, AIG has spent years unloading assets to pay back their debts. The jet liner business, a relic of an over-diversified, over-confident entity, has been a particularly difficult asset to unload, though it should be noted that unlike mortgage-backed CDOs, this asset still has substantive value.  



Earlier in the week it looked as if AIG would unload the jet-leasing subsidiary to a group of Chinese investors for $4.8 billion. While that deal fell through, another with AerCap Holdings (AER) has quickly materialized, albeit with the lower price tag of $4.2 billion.

AIG has been on a selling spree since the government bailed them out to the tune of $85 billion in 2008. In 2009, AIG sold 21st Century Life Insurance for $1.9 billion. In 2010, they unloaded American Life Insurance for $15.5 billion in cash and stock. And in 2011, they sold Taiwanese life insurance entity Nan Shan Life for $2.16 billion.

At the end of 2012 the US government finished divesting from AIG, as the insurer had completed their repayment of the bailout. However, AIG has continued shedding assets to continue streamlining and focusing on their most profitable sectors.  

AIG rose slightly on the rumored deal with AerCap, notching a 1.64 percent gain to hit $49.50 a share. The smaller AerCap rose dramatically, spiking 10.5 percent near end of day to hit $23.68 a share.

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Companies

Symbol Name Price Change % Volume
AER Aercap Holdings N.V. 45.64 0.54 1.20 1,594,448 Trade
AIG American International Group Inc. New 63.02 -0.03 -0.05 8,461,768 Trade
HHSE Hannover House Inc 0.03 -0.00 -3.02 540,194

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