American International Groupsaid Wednesday it is selling an 80 percent stake in its consumer credit business, American General Finance, to hedge fund manager Fortress Investment Group as it continues to sell off assets to repay taxpayers.
Financial terms weren't disclosed. American General Finance provides loans, retail financing and other credit-related products to consumers in the U.S., Puerto Rico, the Virgin Islands, and the U.K.
The company has assets of about $20 billion and liabilities of roughly $18 billion, including $17 billion in debt, which will be excised from AIG's balance sheet.
"We believe in AGF's solid business model, which is why we are retaining a 20 percent stake in the business as part of this transaction," said Robert H. Benmosche, AIG president and CEO.
AIG has been selling assets to pay back some of the $180 billion the government poured in to stave off the giant insurer's collapse in 2008 amid bad bets on credit default swaps and other risky investments.
On Friday, the company said the balance of the debt it owes to taxpayers stood at $132.1 billion on June 30. AIG also is in talks regarding the government's exit from its 80 percent stake in the company.
AGF's sale is expected to close by the end of the 2011 first quarter, subject to regulatory approval. New York-based AIG expects to post a pretax loss of about $1.9 billion in the third quarter related to the AGF sale.
Fortress made a big splash when it debuted on the New York Stock Exchange in early 2007 as the first publicly traded U.S. hedge fund. Its performance has been spotty in the volatile markets since then, and its share price has stalled.
In morning trading, Fortress shares slipped. AIG shares fell as the broader markets slumped.