Founded in 1920, AGF provides loans, retail financing and other credit-related products to more than a million families across the United States, Puerto Rico, the Virgin Islands and the United Kingdom.

The company specializes in providing financing solutions for consumers, including bill consolidation loans, home equity loans, personal loans, home improvement loans and loans to help consumers manage unexpected expenses.

“This transaction marks another important step in our ongoing restructuring process as we seek to monetize non-core assets and pay back U.S. taxpayers,” said Robert H. Benmosche, AIG's president and chief executive officer, in a statement.

“In Fortress, we have found an excellent partner for this terrific franchise,” he added. “We believe in AGF's solid business model, which is why we are retaining a 20 percent stake in the business as part of this transaction.”

Wesley R. Edens, co-chair and founder of Fortress, called AGF “an exceptional franchise with a strong management team and a leading platform for serving the financing needs of consumers nationwide.”

“We believe that AGF is well positioned for significant growth in an underserved market,” he added.

AGF has assets of approximately $20 billion and liabilities of about $18 billion that include $17 billion in debt. The business will be deconsolidated from AIG's financial statements.

Founded in 1998, New York-based Fortress is a global investment manager with approximately $41.7 billion in assets under management as of June 30. It offers alternative and traditional investment products for institutional and private investors.

Reacting to news of the deal, Fitch Ratings placed AGF on “Rating Watch Negative” because it believes AIG and Fortress will engage in “some type of business reorganization” that would include restructuring the firm's capital structure.

AGF is believed to have enough capital to give companies at least two years to review the capital structure before making a move, Fitch added.

Fitch went on to say that AGF's business was negatively affected by the economic crisis with the decline in the U.S. mortgage market and rise in unemployment. Its loan portfolio is “predominately” secured by real estate and modest improvement is expected “in a challenging economic environment,” Fitch said.

Moody's Investors Service downgraded the corporate family and senior unsecured ratings of AGF from “B3″ to “B2″ citing less support from the parent company.

In a statement, Mark Wasden, Moody's senior analyst, noted uncertainty surrounding AGF's future and the need for more information before any additional ratings action is taken.