Economy, Business, Finance News, Technology, Telecommunication, Smartphones, Tablet|Finance | Economy | Money | Financial Market | Stock Market | Central Banks | World Economy | World Finance | News Summary | News Aggregator | Handphones | Technology | Telecommunication | Internet | Broadband | Wifi | Wimax | Bluetooth | Smartphones | Tablets | Computers | PC | Netbook | Notebook

AIG cinched a deal to sell most of its consumer finance unit to investment manager Fortress.

Under the deal, Fortress (FIG) will take over 80% of American General Finance and AIG (AIG) will hold onto the rest. Further terms weren’t disclosed, but the arrangement looks like a win for AIG chief Robert Benmosche (right) because it allows AIG to raise cash as it seeks to pay down its obligations to taxpayers stemming from its 2008 bailout.

“This transaction marks another important step in our ongoing restructuring process as we seek to monetize non-core assets and pay back U.S. taxpayers,” said Benmosche. “In Fortress, we have found an excellent partner for this terrific franchise. We believe in AGF’s solid business model, which is why we are retaining a 20% stake in the business as part of this transaction.”

American General has lent money to more than a million families across the U.S., Puerto Rico, the Virgin Islands, and the United Kingdom, AIG said. The firm makes bill consolidation loans, home equity loans, personal loans, home improvement loans, and loans to help consumers manage unexpected expenses.

AIG bought American General in 2001 as then CEO Hank Greenberg expanded the insurance giant’s reach. The unit posted an $11 million operating loss in the second quarter, which marked a sharp improvement from the year-ago $202 million loss, as the company set aside less money to cushion against future loan losses.

AIG’s investment in American General is valued at $2.4 billion, but the Financial Times reported last week that the firm conceded it might incur a loss on the sale as it raised $4 billion to repay a federal loan to its aircraft leasing business.

AIG shares are up 23% this year but dropped 3% in a market pullback Wednesday.

Related Posts:

• AIG selling business to repay Fed
• Ex-CEO of AIG paid US$15million to regulator
• AIG spinning off troubled subsidiary AIU Holdings
• Soros against credit default swaps
• AIG selling Taiwan securities arm to BEA

AIG agreed Monday to sell its American Life Insurance Co. unit to MetLife Inc. for $15.5 billion in cash and stock, in beleaguered AIG’s second sale of an international unit in a week.

AIG said it will sell the unit, known as Alico, for $6.8 billion in cash and the remainder in MetLife equity. The deal leaves AIG as the second-largest shareholder of MetLife, with a stake of more than 20% in the company.

Selling Alico, one of its largest international life insurance businesses, will allow government-controlled AIG to take yet another step in repaying the nearly $132 billion it borrowed from the federal government beginning in 2008 to avoid collapse.

Expected to close by the end of the year, the companies said the acquisition will also help MetLife, the largest seller of life insurance in the United States, grow internationally and especially target Japan.

The deal came a week after AIG announced an agreement to sell its Asian life insurance business, American Insurance Assurance Ltd (AIA), to Britain’s Prudential PLC in a deal valued at $35.5 billion, including $25 billion in cash.

AIG said it expects to generate about $50.7 billion from these two transactions, including approximately $31.5 billion in cash to repay the New York Federal Reserve Bank and another $19.2 billion in securities that it will sell over time to repay the government.

“This sale is an important step toward repaying the government,” Harvey Golub, chairman of AIG, said in a statement. “Both sales give AIG greater flexibility to move forward with our restructuring and rebuilding efforts, and focus on enhancing the value of our key insurance businesses.”

At the end of February, AIG announced a loss of $8.9 billion in the fourth quarter of 2009, which it said was largely due to the costs associated with selling off large stakes in its insurance businesses to reduce the debt it owes to taxpayers.

In December, AIG sold stakes in AIA and Alico to the U.S. government. In exchange for those transactions, the Fed reduced the amount AIG has to repay taxpayers by $25 billion. AIG said it took a $5.2 billion charge for that agreement last quarter.

The deal for Alico has been approved by the boards of both AIG and MetLife, and is subject to regulatory approvals in the United States and overseas. To top of page

Related Posts:

• AIG sells consumer finance unit to raise cash
• Ex-CEO of AIG paid US$15million to regulator
• AIG spinning off troubled subsidiary AIU Holdings
• Soros against credit default swaps
• AIG selling Taiwan securities arm to BEA

Maurice “Hank” Greenberg, former chief executive of American International Group, has agreed to pay $15 million to settle charges related to an accounting scandal, the Securities and Exchange Commission said Thursday.

A complaint filed by the SEC said Greenberg and former chief financial officer Howard Smith were involved in “numerous improper accounting transactions” that inflated AIG’s reported financial results between 2000 and 2005.

Smith agreed to pay $1.5 million to settle the charges, the SEC said.

“Corporate leaders cannot avoid the truth and consequences of their companies’ performance by using improper accounting gimmicks and signing off on distorted financial reports,” said Robert Khuzami, director of the SEC’s Division of Enforcement, in a statement.

Among the improper accounting transactions listed in the complaint were sham reinsurance transactions as well as dealings with a shell company to conceal multi-million dollar underwriting losses.

The company was also charged with “economically senseless” transactions aimed at inflating investment gains and the sale of tax exempt municipal bonds to improperly report capital gains.

Greenberg, 83, relinquished his post as AIG’s chief executive in 2005 amid a probe by then-New York Attorney General Eliot Spitzer for accounting fraud. The following year, the SEC charged AIG with securities fraud and improper accounting. The company settled the charges by repaying $700 million plus a fine of $100 million.

Greenberg is currently chairman and chief executive of privately-held insurance and investment firm C.V. Starr, which released a statement on his behalf.

“Mr. Greenberg is pleased that after a four-and-a-half year investigation involving the review of millions of pages of documents and numerous depositions, the SEC has now concluded not to charge Mr. Greenberg with any fraud,” said C.V. Starr. “With these issues behind him, Mr. Greenberg looks forward to being able to concentrate on building for the future.”

For his part, Smith had planned to challenge the allegations in court, according to a statement issued by his attorney, Vincent Sama of Winston & Strawn LLP in New York.

“Although Mr. Smith was originally inclined to litigate this matter, resolving the SEC matter allows him to move forward with his life without the added legal costs and distraction of this lawsuit,” Sama said.

AIG was brought to the brink of collapse last year amid towering losses related to insurance products the company sold to investors with souring mortgage-backed investments.

The company has received $82 billion in taxpayer-funded bailouts and is now essentially owned by the government.

Related Posts:

• AIG sells consumer finance unit to raise cash
• AIG selling business to repay Fed
• AIG spinning off troubled subsidiary AIU Holdings
• Soros against credit default swaps
• AIG selling Taiwan securities arm to BEA