The future ownership of AIG's Australian insurance companies is uncertain after the US Federal Reserve announced a $US85 billion ($A107 billion) bailout of the parent company to be funded by sales of the troubled insurer's assets.
 
The Fed said today the US government take an 80% stake in the company to stop a "disorderly failure" that would heap more unwanted assets on to global markets exacerbating the troubles of 14 months of credit crisis.

The 24-month Fed term loan puts a two-year time frame on possible sales of AIG's $US1 trillion in global assets, comprised of businesses with "substantial value" in 130 countries.
 
AIG Life Australian general manager Ken Morgan refused to speculate on the timing of any future spin-offs in Australia or elsewhere, although he said he expected a global plan to be announced.
 
"From our point of view the events have been pretty fast moving," he said.
 
"The events are extraordinary, I don't know how you can characterise them in any other way."
 
Mr Morgan said the Australian life insurance business was healthy and the division serving 1.3 million customers remained in growth mode.
 
AIG's other Australian division, commercial and property insurer AIG Australia said it would communicate developments as they arose, however, local business continued as usual.
 
"The liquidity of AIG Australia remains strong and our ability to pay claims and its commitment to writing challenging risks is undiminished," said Chris Townsend, CEO of AIG Australia in a statement.

"More than 80% of AIG Australia's investments are held in fixed interest securities with the remaining 20% in realty, equities and cash."
 
AIG Australia has assets of more than $1.6 billion, and employs 500 people nationwide, the company said.
 
Despite the local reassurances, parent company AIG issued a statement after the Fed's action, saying the government loan would give it "the time necessary to conduct asset sales on an orderly basis".
 
"We expect that the proceeds of these sales will be sufficient to repay the loan in full and enable AIG's businesses to continue as substantial participants in their respective markets," the company said.
 
The Fed's bailout of AIG comes two weeks after the US Government stepped in to prop up the sagging finances of government-sponsored mortgage buying companies Freddie Mac and Fannie Mae, effectively taking them over.
 
Investment bank Lehman Brothers, whose impact was seen as less direct on the health of the US economy, lapsed into bankruptcy on Sunday night, sending up a cloud of uncertainty over global equities and debt markets.

czappone@fairfax.com.au

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