AIA Singapore Retrenches

It is a matter of time that AIA Singapore starts trimming off excess fats in an effort to cut costs and increase profits to pay its parent company AIG. More importantly, it has to show good numbers in order to attract "strategic" investors to take up so-called minority stakes in AIA Singapore.

I foresee that there will be more such cost-cutting measures, if there is continued loss of confidence in the company leading to a vicious circle of of reduced new businesses, reduced agency strength due to the inevitable migration of agents. And if the business forecast spells more gloom, the faster the sale to strategic investors, the better, or else, the price AIA Singapore can fetch will fall further.

It will get worse before it can get better, which takes time, and time is not on the side of AIG which has to pay back the US$143 billion (up from the original US$85 billion) it now owed the US Government.

"AIG plans to sell of most of its divisions to pay back the debt. Asset sales should be announced by year's end, Chief Executive Edward Liddy told CNNMoney.com last week".