Buffett Considering Purchase of AIG Assets

NEW YORK (Reuters)- Billionaire investor Warren Buffett said on Wednesday his BerkshireHathaway Inc insurance and investment company would consider buyingsome units from American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz), the insurer bailed out by the U.S. government.

Buffett said he expressed interest in buying parts of the giantinsurer over the September 13-14 weekend, when regulators and financialindustry executives were holding emergency talks on problems thatincluded the fate of Lehman Brothers Holdings Inc (LEHMQ.PK: Quote, Profile, Research, Stock Buzz), which filed for bankruptcy protection on September 15.

Speaking on CNBC television, Buffett said he "expressed an interestin one or two" AIG units that weekend, "but the pressures were such andthe hole was deep enough that they simply couldn’t get it worked out.

"Some of those units, most of those units, I believe, will be forsale over the next year or two, and we would be interested in a coupleof them," he said. Buffett did not give details.

Omaha, Nebraska-based Berkshire (BRKa.N: Quote, Profile, Research, Stock Buzz)BRKb.nowns some 76 businesses and stakes in dozens of companies, butgenerates about one-half its business from insurance and reinsurance.

AIG, based in New York, said late Tuesday it signed a definitiveagreement to borrow up to $85 billion from the U.S. Federal Reserve,the central part of a rescue that calls for the government to take a79.9 percent stake.

Chief Executive Edward Liddy has said the company will sell assetswithin two years to help pay off the loan, which has a variableinterest rate now about 12 percent. Liddy, a former Allstate Corp(ALL.N: Quote, Profile, Research, Stock Buzz) CEO, was named last week to replace Robert Willumstad at AIG’s helm.

AIG has about 240 units spread among its general insurance, lifeinsurance and retirement services, financial services and assetmanagement divisions.

Among the units it could sell are its International Lease FinanceCorp aircraft leasing business, the world’s second largest, and itspersonal lines business, which analysts have said could each fetchseveral billion dollars.

AIG collapsed after incurring big losses on credit default swaps,whose value was tied largely to mortgages. Losses began to mount wellbefore Willumstad took the top job in June.

"Top management did not have their minds around what was involvedwith those contracts," Buffett said. "You can do a lot of damage onWall Street with a pen and a piece of paper."

Working with what was a year-end cash pile of $44.33 billion atBerkshire, Buffett spent $5 billion Tuesday to buy Goldman Sachs GroupInc (GS.N: Quote, Profile, Research, Stock Buzz) preferred stock.

In the CNBC interview, Buffett said he prefers acquisitions toholding cash, saying the latter is like "saving sex for your old age."

(Additional reporting by Lilla Zuill; editing by Jeffrey Benkoe)