NEW YORK (Bloomberg) — American International Group Inc., the insurer forced to peddle units to repay an $85 billion US loan, may sell a business providing property coverage for the world's biggest corporations, including General Electric Co.

AIG hired New York-based investment bank KBW Inc. to find buyers for Hartford Steam Boiler, a unit that insures equipment and power plants, said people familiar with the situation who declined to be named because the talks are private. AIG spokesman Joe Norton declined to comment.

An auction of the business, the largest North American equipment-breakdown insurer, signals chief executive officer Edward Liddy may be planning on dismantling a greater share of AIG than he has outlined. Liddy, named CEO by federal officials, said last week that AIG would revamp into a global property-casualty company by selling life insurance and retirement units.

"AIG has to consider selling things outside of what they first indicated," said Rob Haines, a debt analyst at CreditSights Inc. in New York. "It's an indication of how serious their situation is."

Hartford Steam Boiler was publicly traded when AIG bought it in 2000 for $1.2 billion in stock. The firm, based in the Connecticut city of the same name, was founded in 1866 to help assure the safety of boilers used to generate industrial power, according to its website.

The company will be easy to untangle from New York-based AIG because it wasn't fully integrated with the parent, said Paul Newsome, insurance analyst at Sandler O'Neill & Partners in Chicago. The unit "has this incredible dominance in the boiler machine business, a real niche in insurance".

AIG, once the world's largest insurer, has already tapped $61 billion, or about 72 percent, of its U.S. credit line, forcing it to accelerate asset sales. The company agreed September 16 to a government takeover after housing market slump led to three quarterly losses of more than $18 billion.

Standard & Poor's said October 3 it may cut AIG's credit grades because the amount the insurer has drawn down on its credit line is "much larger" than anticipated and there's a risk Liddy doesn't execute his plan.