Africa: African AIG Branches May Stay, Says Area Boss
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The Nation (Nairobi)
9 October 2008
Posted to the web 10 October 2008
Justus Ondari
Nairobi
Local subsidiaries of American International Group Inc. maintained a "business-as-usual" approach even as the parent company set in motion a restructuring process that will see it spinning off some of its operations.
In the wake of the $85 billion (about Sh6.1 trillion) Federal Reserve Bank loan, AIG announced that it intends to concentrate on its core businesses and sell the rest.
"To realise our objective, we will sell a number of extraordinary businesses that are proving to be highly attractive to buyers," AIG chairman and chief executive Edward Liddy said in a statement last week.
The two-year loan gave the US Government a 79.9 per cent equity stake in the firm with assets topping $1 trillion. The US financial services giant, which has operations in 130 countries, has appointed The Blackstone Group and J.P. Morgan as its global coordinators for the divestiture programme.
But speaking in Nairobi, Mr Peter Flint, the new AIG Africa regional president, said the operations in the continent might not be affected.
"The AIG business in various countries are separate entities regulated by the authorities of those areas," he told the press on Wednesday night at Nairobi's Serena hotel.
Mr Flint, who has just succeeded Mr Joost Vink, said his appointment reaffirmed the growing importance of insurance operations in Kenya, South Africa and Uganda.
At AIG Kenya Insurance Ltd, one of the subsidiaries, there was an air of confidence that its operations will not be affected by the restructuring.
"Chairman and chief executive Edward Liddy announced that general insurance and core business will not be sold," Mr Japh Olende, the AIG Kenya managing director, said during the occasion.
While announcing the restructuring, Mr Liddy said the company plans to retain its US property and casualty and foreign general insurance businesses as well as ownership interest in its foreign life insurance operations.
It is understandable given that AIG's worldwide property and casualty businesses generated approximately $40 billion in revenues in 2007.
However, the fate of its other local operation, AIG Investment (EA) Limited, remains open to the restructuring since the company is exploring divestiture opportunities for its remaining businesses.
Safe investments
"AIG is also actively at work on a number of alternatives for its financial products business and its securities lending programme," he said in the statement.
Relevant Links
Mr Jonathan Stichbury, the AIG Investments (EA) Ltd MD, could only say the local shop is sound and that its client's investments are safe since they are held by custodial banks.
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