According to a copy of testimony prepared for delivery to the committee obtained by NU Online, Mr. Liddy will say that, "Representatives of the Fed and the Treasury, and their advisers, are engaged with various AIG offices every day," and, "We view them as partners."

At the same time, the breaking apart of strong constituent insurance units is now underway, his testimony says.

As disclosed in its March year-end 2008 earnings report, AIG is accelerating the transfer of its two major foreign insurance companies, ALICO and AIA, into special purpose vehicles.

"We expect to complete the contractual arrangements for these transfers in the near future," his testimony states.

Stock in these units, according to the March filing, will be exchanged for a special reduction in AIG's debt to the Federal Reserve Bank of New York.

But, as previously outlined, AIG will retain management of the units.

At the same time, AIG is planning to transfer AIU Holdings, its global property and casualty insurance franchise, into a special purpose vehicle with a possible stock offering.

"This move will secure the value of that very substantial business in preparation for the potential sale of a minority stake, which ultimately may include a public offering of shares, depending on market conditions," his testimony says.

Mr. Liddy states that the timing of outright divestitures will depend on market conditions.

"We intend for taxpayers to realize the fullest possible value from every asset disposition," he is set to explain.

"And we intend that every company that emerges at the end of the restructuring will be strong, transparent and a credit to all its owners," he adds.

Under the plan, the parent company will become smaller and its major insurance companies "will emerge with diverse products, strong management and clear growth strategies worthy of investor confidence," his testimony says.

Mr. Liddy is also expected to say that the company is making progress in winding down the complex derivatives portfolio at AIG Financial Products. From a peak of notional exposure of $2.7 trillion, the current exposure is $1.5 trillion.

He says AIG continues to explore multiple options to "break apart these trading books so that we can reduce the remaining risks, sell off portions of the business, repay or otherwise retire the AIGFP debt, and exit this segment of the financial products business."

Mr. Liddy also said AIG officials are working to simplify the complex structure of AIG, which currently has a "global footprint and an intricate capital structure characterized by over 4,000 legal entities, cross-ownership and myriad special purpose structures."