AIG places AIU Holdings into special unit, renames it Chartis

NEW YORK -- AIG placed Chartis, formerly known as AIU Holdings, into a separate unit known as a special-purpose vehicle, or SPV. SPVs are entities sometimes set up ahead of the split or sale of a unit to separate its operations from the parent company.

In April, New York-based AIG said it would spin off AIU Holdings, which includes commercial insurance, foreign general insurance and private client group businesses, into a separate firm as part of its restructuring plan to help repay a $182.5 billion government bailout. The business serves more than 40 million clients in 160 locations.

Kristian Moor was named president and CEO of Chartis on Monday.

The government provided AIG with an $85 billion rescue package amid the growing credit crisis in September. In return, the government took about an 80% stake in AIG. Since then, the government has provided additional rounds of support that now total $182.5 billion.

AIG has been selling assets, cutting costs and planning to spin off multiple operations to repay the government.

Aside from AIU Holdings, AIG has also said it would place two life-insurance subsidiaries — American International Assurance and American Life Insurance — into special-purpose vehicles ahead of planned spinoffs. After setting up a special-purpose vehicle, AIG could still have the option of selling the operations to another investor or launching initial public offerings for shares in the businesses.

Although AIG could retain majority stakes in each of the spinoffs, separating the units allows them to create different management teams to operate the firms.

The spinoffs also allow AIG to separate the still-performing businesses from a parent company whose brand is likely hindering business. Being able to rename some of the operations while cashing in a portion of their market value could help further stabilize business while paying off the government loan.