Travel Guard, the travel insurer owned by AIG, is part of a group of companies that will be spun off into a separate holding company called AIU Holdings.
AIU is an acronym for American International Underwriters.
“The establishment of AIU Holdings Inc. will assist AIG in preparing for the potential sale of a minority stake in the business, which ultimately may include a public offering of shares, depending on market conditions,” AIG said in a statement.
Edward Liddy, AIG’s chairman and CEO, said the creation of AIU Holdings “will help protect and enhance the value of these key businesses and position them for the future.”
In a letter to travel agency consortia, Travel Guard CEO John Noel said the move “will position Travel Guard and other entities within AIU Holdings to operate more independently of the parent company.”
Noel also advised of a possible public offering of shares in AIU Holdings.
Meanwhile, Noel reassured the trade that Travel Guard has never been stronger financially in its 26 years in business.
He said Travel Guard and its underwriter, NUFIC, are part of AIG’s Commercial Insurance Group. He said the group performed well in 2008, and that its surplus "increased by 1.1% in the fourth quarter and now stands at $26.6 billion, which is greater than any other U.S. insurance company in our line of business.
"Furthermore, the financial strength ratings of Commercial Insurance Group and Travel Guard's underwriter remain ‘excellent’ and were affirmed this week by AM Best, S&P, Moody's and Fitch,” Noel said.
All parts of the Commercial Insurance Group will be spun off into AIU Holdings. The spinoff will create a large business: AIG said AIU Holdings will have “more than 44,000 employees and 500 products and services serving 40 million commercial and individual customers in 130 countries and jurisdictions.”
Travel Guard had already begun to distance itself from its troubled parent. AIG purchased Travel Guard in 2006, and from January 2007, the travel insurer was branded AIG Travel Guard.
However, after AIG first sought government assistance last September, the business reverted to the Travel Guard brand.