NU Online News Service, April 21, 4:08 p.m.EDT

WASHINGTON–American International Group announced todayit was accelerating the spin-off of its major property-casualtyinsurance units into a separate company so that it can sell off aminority share to the public.

The decision, undertaken with the strong support of the FederalReserve Bank of New York, was the first component of a revisedresolution plan unveiled when AIG announced a huge loss March2.

At that time, AIG disclosed that the government had agreed tothe third revision of the AIG resolution plan. That plan included a$30 billion additional line of credit for AIG that would bring itstotal aid from the government to $205 billion if the total amountwas taken.

The spun-off unit will be AIU Holdings and will include itscommercial insurance, foreign general insurance and private clientgroup units.

It will result in AIU Holdings' having a board of directors,management team and brand distinct from AIG, the company said.

AIG will make it an independent entity by transferring thecompany to a special purpose vehicle in preparation for thepotential sale of a minority stake in the business, the companysaid.

"This ultimately may include a public offering of shares,depending on market conditions," said AIG.

Under the special purpose vehicle arrangement, AIG willcontribute the equity of AIU Holdings into an SPV in exchange forpreferred and common interests in the SPV.

AIG also said it intends to purchase from AIU Holdings itsequity interests in International Lease Finance Corporation, UnitedGuaranty Corporation and Transatlantic Holdings Inc.

"The sale of these interests to AIG further separates theproperty-casualty operations from AIG and its other affiliates,"AIG officials said.

Moreover, they added, "the sales clarify the businesses of AIUHoldings, improve the quality of its capital and help position thecompany for continued success in the future."

In connection with the decision, a spokesman for the FederalReserve Bank of New York said, "This action is an important nextstep in the company's efforts to place key business units in thebest position to optimize their operations and maximize theirvalue."

The statement added, "It is in the best interests of theAmerican taxpayers, the company, and its customers and employeesthat these efforts succeed."

The decision was announced only hours after Treasury SecretaryTimothy Geithner was grilled by the Congressional OversightCommittee on the Troubled Asset Relief Program.

Data revealed at the hearing disclosed that AIG had receivedmore TARP cash than anyone else from the program, $70 billion. Therest of the aid to AIG came from other facilities, includingpurchase of troubled assets.

According to the data disclosed to the committee by Treasury,the second largest recipients were Citigroup and BankAmerica, whowere given $52.5 billion through the TARP program's targetedinvestment program and guarantees.

In opening remarks at the hearing, Rep. Jeb Hensarling, R-Tex.,a member of the oversight panel, had noted that "most people areunimpressed with the Treasury's management of AIG." He did notelaborate.