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AIG sale a $308 million pittance

Jan. 14, 2009 at 10:45 AM   |   Comments

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NEW YORK, Jan. 14 (UPI) -- U.S. insurance giant American International Group's sale of AIG Life Insurance of Canada is a small step in its recovery process, an analyst said.

AIG has used nearly $40 billion of its $60 billion federal line of credit, established when the company was near collapse last year. In addition, the government invested billions in the company in a rescue package worth $152.5 billion, The Washington Post reported Wednesday.

AIG Tuesday announced the sale of the life insurance company to BMO Financial Group for about $308 million.

It is the fifth sale of a subsidiary AIG has made to help repay the government, which now owns about 80 percent of the company.

But the recent deal "is really just a drop in the bucket," Rob Haines at CreditSights said.

AIG spokesman David Monfried said the "the big (AIG) assets … commanding in the tens of billions in some cases," will be up for sale "in the coming months."

Since accepting the bailout funds, AIG has sold five companies, raising at least $2.28 billion, the Post said.

It's a start. But, to repay its obligations to the government, "we're going to have to see much more than these little drips and drabs," Haines said.

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