Two life insurers, AXA SA, Paris, and MetLife Inc., are reportedly vying to purchase American International Group's American Life Insurance Co. (ALICO).
Spokespersons for AXA and MetLife declined comment and a spokesperson for AIG could not be immediately reached to comment on the Bloomberg report.
ALICO, domiciled in Delaware, had $33.5 billion in net premiums written in 2007 on net income of $737 million, according to Highline Data, part of Summit Business Media, which also owns National Underwriter.
A report last week by ProPublica, a New York-based nonprofit, public-interest news organization, raised questions about a potential tax issue and the impact that could have on the sale of ALICO, considered to be one of AIG's most profitable units.
The issue centers on U.S. Internal Revenue Service ruling 2004-75, issued in 2004. The ruling requires that nonresident aliens receiving payments from contracts such as annuities from a U.S. life insurer are subject to a 30 percent tax withholding.
According to the ProPublica report, ALICO is saying that because it is an 80/20 company (a business in which 80 percent of its revenue is from overseas) it is not subject to the 2004 IRS ruling because such companies are not specifically mentioned.
However, the report said the issue is unclear and company officials reportedly said the matter has not been disclosed to potential buyers. The report also said that if the company has to comply with the ruling it would have a negative impact on business and on the sale of the company at a price that would help AIG repay its current $150 billion loan to the U.S. government.
An AIG spokesperson referred National Underwriter to a response posted under the article in which the company said that as a normal part of the divestiture process, AIG approached the IRS to affirm its position on the issue and that the issue is not material to ALICO. The response goes on to say the information would be disclosed to companies that are serious contenders for the company.
ProPublica asserted the accuracy and fairness of its story.
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