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From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.


And I'm Melissa Block.

The insurance company AIG took a big step today toward paying back some of the billions of dollars in federal bailout money that it received. The company sold its valuable Asian subsidiary and will use the proceeds to reimburse the U.S. government.

But as NPR's Jim Zarroli reports, AIG still faces huge losses and it's not clear how much money it will be able to raise down the road.

JIM ZARROLI: AIG will sell its American international insurance unit to the British company Prudential for more than $35 billion in stock and cash.

Professor JOSEPH MASON (Professor of Finance, Louisiana State University): This particular unit is one of the jewels in AIG's crown.

ZARROLI: Joseph Mason is professor of finance at Louisiana State University.

Prof. MASON: One of the things that this unit brings with it is life insurance written against a demographically young population in Asia.

ZARROLI: AIG is also expected to sell another unit to MetLife sometime soon.

AIG collapsed in September 2008 largely because of losses it incurred on insurance products it sold to Wall Street banks. Since then, the company has become the largest single recipient of government aid. The U.S. pledged about $180 billion to the company, all but about $50 billion has been used.

But with the public souring on the bailouts, AIG has faced pressure to reimburse taxpayers, says Christopher Whalen of Institutional Risk Analytics.

Mr. CHRISTOPHER WHALEN (Co-founder, Institutional Risk Analytics): They really have no choice. The government and the Federal Reserve want to be paid back. And the only prospect for doing so is to sell assets.

ZARROLI: The problem, says Whalen, is that after unloading these two units, AIG simply won't have a lot of assets left to sell.

Mr. WHALEN: It's a good thing, but these are some of the best assets that AIG has. So I'm not sure that we're going to see anything like the proceeds that we need for the government to be paid back in full.

ZARROLI: Whalen notes that AIG now has a market capitalization of about three and a half billion dollars, meaning that's what its stock is worth.

Mr. WHALEN: Once you sell the Asian business, which, as I say, is one of the most attractive businesses that they have, and you lose that cash flow, you lose that revenue, what's left is going to be worth less.

ZARROLI: At the same time, AIG said last week that it lost another $9 billion during the last three months of 2009. It was a sign that the worst isn't over for the company.

Again, Joseph Mason.

Prof. MASON: The big question is where does all this stop? When do the losses stop rolling in as a result of the subprime experience and related upheavals? And when do we get back to stable value for those assets?

ZARROLI: And that's a question U.S. taxpayers want answered as well. Many big banks have already paid back some or all of the money they got from the federal government. But AIG, like Fannie Mae and General Motors, faces much longer odds. And even if it can stop losing money, it's likely to emerge from the current turmoil a much smaller and weaker company.

Jim Zarroli, NPR News, New York.

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