NEW YORK (Reuters) - Bailed-out insurer American International Group rebranded its property-casualty business under the name Chartis yesterday and said it would put the equity for the division into a separate company — key steps toward a sale of at least part of the business.

A special-purpose vehicle formed by AIG will consist of Chartis' North American commercial insurance units, foreign general insurance, and private client group.

"This is a significant milestone, as it sets up the legal structure" for Chartis to operate independently, Kristian Moor, the newly named CEO of the property-casualty business, told Reuters in an interview.

The Chartis name replaces the property-casualty companies' previous branding as "AIG" or "AIU," the name long used by these businesses outside the United States.

Plans are also afoot to replace the AIG sign removed months ago from the front of the property-casualty division's New York headquarters with the Chartis name, and new compass logo.

Chartis is building on plans first announced in March that distance itself from parent company AIG, after it lost more than $99 billion in 2008. Chartis, in contrast, was profitable, earning more than $2 billion.

Chartis plans to sell a stake of up to 20 percent in either an initial public offering or in transactions with private investors, cutting AIG's ownership, Moor said.

The offering could raise billions of dollars for AIG, helping it to repay the US government, which has committed up to $180 billion in aid, including about $85 billion in loans.

But there are a few hurdles to leap first.

The company needs its own board of directors, something it expects will be in place by year end, said Moor, who was previously president of the division and retains that title.

It also must choose bankers to represent it in an IPO or private offering, Moor added, and will likely do so in the next few months.