Business - Financial Fortress buying most of AIG's American General

NEW YORK (AP) -- Fortress Investment Group LLC said Wednesday it is buying 80 percent of lender American General Finance Inc. from American International Group Inc. for an undisclosed sum.

American General Finance provides loans, retail financing and other credit-related products to clients 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.

AIG has been selling off assets to help pay back some of the $180 billion in federal bailout funds it received in late 2008. The New York-based insurer expects to post a pretax loss of about $1.9 billion in the third quarter related to the AGF sale.

"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.

The deal is expected to close by the end of the 2011 first quarter, subject to regulatory approval.

In morning trading, AIG shares fell $1.30, or 3.2 percent, to $38.89. Shares of Fortress shed 12 cents to $4.07.

AIG last week reported a $538 million loss in the second quarter due to charges related to selling assets to repay taxpayer funds it received during the financial meltdown. Its CEO also said last week that discussions are under way regarding a government exit from its 80 percent stake in the company.

Published: Thu, Aug 12, 2010