Troubled insurer American International Group Inc. (AIG) is in advanced discussions with the US authorities over a restructuring that would split the company into at least three government-controlled divisions, the Financial Times reported on Thursday.
Under the proposed plan, the government would swap its current 80% holding in the insurer for large stakes in three units - AIG's Asian operations, its international life assurance business and the US personal lines business, the FT reported. A fourth unit, comprised of AIG's other businesses and troubled assets, could also be formed.
In return, the authorities would relax the terms, or even cancel a large portion, of a $60 billion five-year loan to AIG and convert $40 billion-worth of preferred stock into shares.
The report stated that the restructuring could provide a template for carving up other troubled financial groups such as Citigroup.