AIG CEO Reveals Plans to Expand Mortgage Business

""American International Group"":http://www.aig.com/home_3171_411330.html (AIG) is making plans to move away from its savings and loan business and toward mortgage investment, CEO Bob Benmosche revealed in an ""interview with Reuters"":http://www.reuters.com/article/2012/11/12/us-aig-assets-idUSBRE8AB0LK20121112.

[IMAGE]

Benmosche said the company is waiting to sell its savings and loan business as soon as it earns the designation of ""systematically important financial institution"" (SIFI). That way, AIG won't lose regulatory oversight at any point in the process-an important factor in maintaining credibility after the government bailed AIG out in 2008, the CEO remarked.

While the SIFI designation has not been made yet, AIG expects to receive it, Benmosche said.

Referring to the savings and loan business, Benmosche told Reuters ""[i]t's a business that doesn't make sense to be in."" He would not disclose how much the company expects to receive from a sale, but he said the business has less than $1 billion in assets.

Instead of working in savings and loans, AIG is more seriously exploring the mortgage market. The company's mortgage insurance subsidiary, ""United Guaranty Corporation"":https://www.ugcorp.com/index.html (UGC), has seen steady growth after adopting a risk-based pricing strategy. However, Benmosche said AIG is interested in moving beyond mortgage insurance.

""We are also now looking at ways we could become direct investors in mortgages,"" he told Reuters. ""We are going to do more of our own direct lending, both commercially and residentially.""

With interest rates hovering around all-time lows, ""it makes a big deal"" for investors to get extra yield by buying mortgages directly, Benmosche said. He revealed AIG is in talks with banks about buying their non-agency mortgage debt.