Benefits of US tax breaks on loss-making units may halt sale
AIG may sell stakes in its businesses – especially its profitable property and casualty unit Chartis, rather than whole units, to get big tax benefits from offsetting losses, Reuters reports.
AIG reported about $12.8bn of these "deferred tax assets" at the end of June, and that number could rise.
New CEO Robert Benmosche is asking whether tax benefits could make it more worthwhile to hold off on selling AIG's largest, most profitable units.
Selling 20% of Chartis?
Chartis is worth about $40 billion, and finding a buyer willing to pay that much would be a tall order and it is twice the size of the largest ever US new listing, which was the $20bn IPO by Visa.
Floating 20% of Chartis could raise more than $8bn. Plus, the unit could provide billions of dollars more in deferred tax assets as it grows more profitable.
"You can pay back billions of the obligation to the U.S. taxpayer just by making smart use of (tax loss) carryforwards that AIG Inc is sitting on," a source told Reuters.
