Robert Benmosche, chief executive of American International Group Inc. (AIG), said the insurance company would "take this year to think" about what it will do with its minority stake in pan-Asian life insurer AIA Group Ltd. (1299.HK)

Benmosche said it "was not in the shareholder interest" to sell the stake quickly, even though the increases and decreases in AIA's stock price translate into volatile quarterly earnings for AIG.

For now, any proceeds of a possible sale would go to pay back money AIG still owes the U.S. after its bailout amid the depths of the financial crisis. But AIG also plans an initial public offering of its aircraft-leasing unit, International Lease Finance Corp. in "a few" months and those proceeds along with other assets may be enough to pay back the $8.4 billion owed the U.S. Treasury, Benmosche said.

That would leave AIG free to do what it wants with its stake in AIA. Benmosche said options could include using proceeds of a sale of the AIA stake to help reduce the "overhang" of the U.S. Treasury's 77% ownership of AIG's common stock.

They could also include buying more AIA shares, which trade in Hong Kong, so that AIG's ownership of its former subsidiary exceeds 50%.

That move would consolidate AIA back onto AIG's balance sheet, and the practice of marking the value of its AIA stake up or down every quarter would cease.

"Once you're back to 51%, the volatility goes away," Benmosche said. AIG currently owns one-third of AIA, valued at about $14 billion.

   -By Erik Holm, Dow Jones Newswires; 212-416-2892; 
   erik.holm@dowjones.com
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