Selling off a crown jewel

In its race to pay back billions in bailout funding, AIG has agreed to sell one its biggest assets, American International Assurance (AIA), the only wholly foreign owned insurer in China. AIA was founded in Hong Kong back in the forties and has been a tremendous moneymaker for decades.

AIG had planned to raise $20 billion from a planned IPO for its Asian life insurance business, so accepting Prudential of Britain’s offer of more than $35 billion is a no-brainer. AIG CEO Robert Benmosche says the deal will allow AIG to repay taxpayers more quickly and give the company "greater flexibility" with its restructuring plans. The reaction from analysts is this move will eliminate some of the pressure on AIG. Certainly, there are few CEO’s facing more pressure than Benmosche.

But I see the sale as yet another tragic chapter in the AIG saga. Founder C.V. Starr was an American who started his company in China in 1919 and built it into a worldwide empire, a remarkable achievement. Now, AIG has been forced to sell off one of its crown jewels, a vibrant company that had nothing to do with the mistakes that led to AIG’s near collapse and bailout.

It would have been nice to see AIG retain one of its most profitable operations in a growing region, eventually bringing in enough revenue to help pay back taxpayers. But right now, there’s little patience for AIG, and I can’t blame Benmosche for taking advantage of a good offer.