Systemically risky AIG outlines crisis plans

American International Group (AIG) would divest parts of its business and halt policy sales if it got into financial trouble again to avoid having to seek a second public bail out.

The US insurer, which repaid a government rescue package in 2012, submitted the wind-down plans as part of a report required by regulators after it was designated systemically risky by federal regulators last year.

If the sale of assets is insufficient to stabilise AIG, the insurer’s main subsidiaries would eventually be liquidated, according to the company’s document. The plan is similar to what is submitted by banks also regarded as systemically risky.

“The resolution plan provides for an orderly resolution of AIG within a reasonable time period in the event of material financial distress or failure without posing systemic risk to the larger financial system and without the need for any government or taxpayer support,” AIG said in the plan.

“In addition to the strategies proposed in the resolution plan, AIG believes that there are multiple alternatives for the orderly resolution of AIG’s material entities and core business lines that also would not pose systemic risk to the larger financial system. Additionally, in an actual resolution scenario, the optimal resolution outcome may differ from the strategies proposed in the resolution plan. Nonetheless, AIG believes that it has developed an effective and feasible resolution plan.”