People close to the situation said AIG was looking at instalment payments and other flexible options to make it easier for potential buyers to bid for assets and increase its chances of surviving as an independent company. The moves, being considered by AIG's management, are aimed at boosting competition for the disposals and countering the perception the company will be forced to sell at bargain prices to repay government aid.
Under the current deal with the Fed, which bailed out AIG twice this year – most recently in November extending the rescue package to $150bn – the insurer can only sell assets to bidders paying at least 90 per cent in cash. This is designed to ensure that AIG can pay both the interest and the principal on a five-year $60bn government loan as well as $4bn a year in interest on $40bn of preferred shares owned by the authorities.
