NEW YORK (Bloomberg) — American International Group Inc. head Edward Liddy, who promised investors a smaller, nimbler company after selling units to repay an $85 billion US loan, has shareholders wondering if there will be anything left to run.

Liddy, 62, needs to raise cash quickly because AIG has already borrowed $44.6 billion and will owe at least $8 billion in annual interest charges. He'll have to sell AIG's aircraft leasing unit, its US life insurance division, reinsurer Transatlantic Holdings Inc. and an auto insurance unit, said analyst Gary Ransom of Fox-Pitt Kelton Cochran Caronia Waller.

"The US didn't give AIG a subsidy meant to keep the company afloat," said Keith Wirtz, who helps manage $21 billion as chief investment officer of Fifth Third Asset Management in Cincinnati. "Rather, the terms of that loan are saying that the company is to be broken into pieces and sold off."

Liddy, the former Allstate Corp. CEO appointed to AIG in the takeover, must reassure clients and employees the largest US insurer by assets will survive after making good on its debts. The firm, which agreed on September 16 to give the government a 79.9 percent stake in exchange for loans requiring annual interest payments of at least 8.5 percent, may unveil which units are for sale in a conference call this morning.

AIG hired JPMorgan Chase & Co. to find buyers for the US life insurance and annuities businesses, three people familiar with the situation said. Selling the units would be a reversal for Liddy who has said his priority is to keep property and casualty and life insurance operations.

AIG is considering "strategic alternatives" for its 59 percent stake in Transatlantic, the reinsurer said in a September 29 filing. AIG has agreed to sell its 50 percent ownership of the London City Airport. Spokesman Joseph Norton declined to comment.

The insurer may hold onto just its commercial property-casualty units, Ransom said in a September 24 note. Other analysts, including Morgan Stanley's Nigel Dally, have said AIG could be forced to sell all of its subsidiaries to repay the US.

"This business will probably have to be cannibalised to the point it's unrecognisable," said Marshall Front, who oversees $700 million as CEO of Front Barnett Associates in Chicago. "It's difficult to see how there will be any value left for shareholders." Front sold his AIG stake last month.

Competitors may want underwriting units that remained profitable as AIG was overwhelmed by losses on holdings tied to U.S. mortgages. Billionaire Warren Buffett told CNBC September 24 that his Berkshire Hathaway Inc. may consider buying some AIG businesses, without naming which ones. "This is the largest series of insurance merger and acquisition transactions in anyone's experience," said Alexander Dye, a partner at law firm Dewey LeBoeuf LLP who heads US mergers and acquisitions. "Nothing comes close to it."

Munich Re, the world's biggest reinsurer, is "interested" in AIG assets, CEO Nikolaus von Bomhard said yesterday in a Bloomberg Television interview. The Munich-based reinsurer has said it's seeking to expand its primary insurance business.

Toronto-based Manulife Financial Corp. is looking at the Asian assets of AIG, the Globe and Mail reported last week. Vienna Insurance Group and Tokio Marine Holdings Inc. may also be interested in AIG units in their regions, said insurance analyst David Bradford of Advisen Ltd.

Liddy must hurry to sell businesses because they are "losing value by the day" as customers and employees leave for competing insurers, Ransom said.

"There's great confusion, and our competition, God love them, is going to prey on that confusion," Liddy told employees on September 18. "They want to get our business one policyholder at a time."

AIG almost collapsed after its credit ratings were cut September 15, triggering a liquidity squeeze as it had to post more than $10 billion in collateral. The firm had sold more than $400 billion in credit-default swaps, the protection for debt investors that plunged in value as the securities they guaranteed declined.

The company, reeling from a share slide and three quarterly losses totaling more than $18 billion, ousted two successors to Maurice (Hank) Greenberg, who ran the insurer for 38 years until 2005. Martin Sullivan's three-year tenure ended June 15, and his replacement, Robert Willumstad, left amid the US takeover before his scheduled announcement of a turnaround plan.

"Liddy's doing everything he can to keep the companies intact," Bradford said. "He has to be as optimistic as he reasonably can be — he's as much a cheerleader as anything."

Liddy may be helped by the $700 billion bank-rescue package that passed a Senate vote on Wednesday, said New York Insurance Superintendent Eric Dinallo. If the banks that bought AIG credit-default swaps sell their bad mortgage assets to the US, those contracts could be terminated, he said.

AIG said it will issue preferred stock worth 79.9 percent of the company to a trust of the US Treasury. The shares will be issued without investor approval because delays would "seriously jeopardise" AIG, the firm said. The US gets the stake "even if the credit facility is repaid in full", AIG said in a September 26 regulatory filing.

"AIG is diminished, but it's not like it's lost all its value," said David Schiff, editor of industry newsletter Schiff's Insurance Observer. "If they can sell most of the businesses they've bought, they'll be left with a global property-casualty business."