Local operations of troubled insurance giant AIG are safe from sale and major job losses, president and chief executive officer George Cubbon said yesterday.

Speaking to the press for the first time since the company found itself in a battle for survival stemming from losses in its financial products unit, which brought the massive global corporation to the brink of bankruptcy, Mr. Cubbon said he expects no more than one or two job losses in Bermuda.

AIG's parent company found a lifeline via an $85-billion loan from the US Federal Reserve on September 16 but is now forced to sell off many of its assets and subsidiaries to pay down the loan which carries 8.5 percent interest.

Its global CEO Edward Liddy — appointed after the Fed loan was announced — has promised a "smaller and more nimble" company will emerge.

On Friday Mr. Liddy held a webcast conference call with investors saying the company intended to hold on to its US property and casualty and foreign general insurance businesses and to retain a controlling interest in its foreign life operations but all other entities are now up for sale.

The core business AIG hopes to retain generated $40 billion in revenues in 2007.

Yesterday Mr. Cubbon said, in terms of the Bermuda operations, which primarily fall under foreign general insurance, there should be no downsizing. "The sell-off of assets that was announced last Friday will have a very minimal effect on our office here because what we do here is on the property and casualty side," Mr. Cubbon said.

"Our chairman, Mr. Liddy, has not actually announced a list of the entities that will be sold but it seems likely that some of those will be on the life side, particularly in Southeast Asia, some are likely subsidiaries of companies based in Bermuda and also companies that we do insure. However, in terms of head count, the impact will be minimal."

AIG employs 205 people in Bermuda in the eight licensed entities under its umbrella. Mr. Cubbon said the company expects to lose no more than two jobs over the course of two to three years as a result of AIG's forced restructuring.

"Of course that is absent any other things that might change or happen," he said. "Companies are in constant states of flux and change anyway. Our biggest challenge, as a corporation really, will be retaining clients.

"At this time we are working very hard to retain our clients. The interesting thing is, I think from a client's point of view, that all our companies are well regulated, well capitalised and have assets which are not available to the AIG parent. So, in terms of clients, I don't think anything has changed, in fact, it might have changed for the better."

Mr. Cubbon said there would be no change in terms of the services that AIG offers from the local office.

As the crisis developed, Mr. Cubbon admitted there were grave concerns about survival and the management made an effort to speak with staff about the situation both in the local office and via communications from AIG in New York.

"The concerns that anyone might have had were allayed by what Mr. Liddy announced on Friday," Mr. Cubbon said. "I think most people here have a degree of confidence in the company. We've been here a long time and we have a lot of long-serving employees and I think, over the years, they have seen a lot and know that, absent a major catastrophe, they would not be let go at a moment's notice. Although, having said that, clearly had the Fed and US government not thrown that lifeline we would have had to declare bankruptcy and then anything could have happened."

Local operations were also not tied into the disastrous performance of the Financial Products unit, whose exposure to credit default swaps brought the company to edge of the abyss.

Effectively under the terms of the Fed Loan, the US government has 79.9 percent ownership of AIG at the moment, but Mr. Cubbon said that should not alter the company's relationship with its regulator, the Bermuda Monetary Authority. "Obviously, the ownership has changed but shareholders change all the time," he said.

Mr. Liddy has said the intention is to sell off what assets AIG can to pay down the loan and get back control of the company as soon as possible. The company has already drawn $61 billion from the loan.

AIG first incorporated in Bermuda in 1947 and has long been a major employer. Going forward, Mr. Cubbon said he expects there will be challenges for AIG's local operations in the face of the ever spiralling global economic slowdown but also opportunities.

"I think it will be business as usual," he said. "There is still going to be a demand for insurance. Insurance is the oil that makes everything happen. People don't develop buildings, people don't sell products without insurance. There may be a slowdown but essentially insurance will continue and what we have here in Bermuda and what AIG has developed has been in response to demand. That demand, while it would be foolish to say it won't suffer, it will continue to be there."

Mr. Cubbon also had much praise for the BMA's handling of AIG's challenges in recent weeks. The company was in regular contact with the BMA. "I think one of the biggest concerns was in terms of the employees," he said. "I am confident for the foreseeable future there will be no change.

"The BMA have been very supportive and helpful. They have taken a lot of initiatives in the past few years to up their game and they really are, as a regulator, very supportive."

After Mr. Liddy spoke to investors and analysts last Friday, Mr. Cubbon said the president of the foreign general division spoke to employees later that morning to address concerns about the future.

"And I spoke with employees over the weekend to give reassurances," he added. AIG's employees are "very loyal and knowledgeable", Mr. Cubbon said. He took it as a sign of confidence in the company, that after he spoke to employees two weeks ago when no one knew what would happen to the company, he invited employees to come speak with him personally — alone or in groups — but not one person took up his offer.

"Absent any unforeseen changes, and things can change overnight, this operation will carry on," he said. "Like all entities, it is constantly evolving anyway."

The focus for the company at the moment is to keep clients happy. "Clearly we can't be better than we were, clients can't have all the confidence they had three weeks ago, however, we can work very hard to build on the confidence they have left and do everything we can to make our clients happy. I am telling employees, we not only have to give a good service, but the very best service."