Insurer AIG, the recipient of a $180 billion government bailout, said on Tuesday that it has taken another big step in winding down a unit that caused much of its financial bleeding over the past year. AIG Financial Products has completed the sale of its energy and infrastructure investment assets, for net proceeds of about $1.9 billion.
“The completion of the sales effort for this portfolio is a significant milestone in the ongoing process of winding down AIGFP's business,” said AIG Financial Products Chief Operating Officer Gerry Pasciucco.
Pasciucco was brought in by AIG last year to oversee the process of reducing trillions of dollars in trading positions and liabilities held by the unit.
As of the end of the second quarter, AIG Financial Products reported that it had cut its derivatives portfolio by 13% to $1.3 trillion.
Once the world's largest insurer, American International Group Inc nearly collapsed from credit default swaps, a type of derivative that had been sold by the financial products business. AIG was left on the hook for tens of billions of dollars in collateral payouts to some of the biggest US and European banks.
While AIG's problems started with the derivatives, its financial woes had a wide impact on other businesses, leading to weaker results in the second quarter.
Still, improving financial markets drove the company to a $1.8 billion net profit in the period, AIG's first profitable quarter since the third quarter of 2007.
AIG's stock, which had been on a tear since last week, doubling as the insurer's financial picture showed signs of improvement, retreated on Tuesday, falling 11.8% to $25.31 in afternoon trade on the New York Stock Exchange. (Reuters)