AIG sells Canadian mortgage insurance unit

AP News
Posted: Jan 05, 2010 12:30 PM

The Canadian mortgage insurance business of American International Group Inc. will be sold to a private investor group headed by the Ontario Teachers' Pension Plan, the groups said Tuesday.

Terms of the transaction were not disclosed.

AIG's sale of the Canadian mortgage division is the latest business unit to be sold by the insurance giant, which has been selling assets and spinning off divisions in an effort to help repay a government bailout package received last year when it was on the brink of collapse.

AIG United Guaranty Mortgage Insurance Company Canada, based in Toronto, is a leading mortgage provider in Canada with assets of about $264 million.

Teachers' Private Capital is the private investment department of the Ontario Teachers' Pension Plan, the largest single-profession pension plan in Canada. It is an independent corporation responsible for investing the fund's assets and administering the pensions of Ontario's 284,000 active and retired teachers.

AIG, based in New York, was bailed out by the government last fall at the peak of the credit crisis. As losses continued to pile up, the government eventually extended AIG an aid package worth more than $180 billion. The government received a stake of almost 80 percent in AIG in return for the support.

Just last month AIG said it would slash the amount of money it owes the government by $25 billion when it gives the government preferred equity stakes in two of its life insurance companies, American International Assurance Co. and American Life Insurance Co.

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The companies will be placed into special holding units as AIG decides whether to complete initial public offerings or sell them privately.

As of Sept. 30, AIG had tapped $122.31 billion of the aid package and owed the government $85.66 billion in loans. The separation of AIA and Alico would reduce the outstanding aid package to $97.31 billion and the amount owed in loans to $60.66 billion.

Shares of AIG fell 34 cents to $29.55 in afternoon trading.