Fortress to buy most of AIG consumer finance unit

American International Group Inc said on Wednesday it will sell most of its consumer finance unit to Fortress Investment Group and take a $1.9 bln pre-tax loss due to the sale.
AIG, majority owned by the U.S. government, is selling 80% of American General Finance to Fortress managed funds and affiliates as it restructures after a bailout.
It did not disclose terms of the deal.
AIG will own the 20% of the group that it did not sell to Fortress, but said the unit will not be included in its financial statements. The companies expect the deal to close by the end of the first quarter of 2011.
Fortress, one of only a few publicly traded hedge fund groups, was involved in a similar deal earlier this year when some of its funds bought European assets from Ally Financial's Residential Capital unit.
In has made other recent acquisitions. It bought bond manager Logan Circle Partners for $21 mln and announced a deal in July for loan servicing firm CWCapital.
Fortress's share price has been a disappointment for investors since it debuted $18.50 in 2007. On Wednesday, after the AIG deal was announced, the share price fell 4.5% to $4, making it the industry's worst performer for the day.
AIG, once the world's largest insurer, nearly collapsed in September 2008 from credit default swaps that left it on the hook for tens of billions of dollars in payouts to some of the biggest U.S. and European banks.
It has been selling assets to repay taxpayers, to whom it still owes more than $100 bln.
American General Finance, which provides loans to people in the United States, Puerto Rico, the Virgin Islands and the United Kingdom, has assets of about $20 bln and liabilities of about $18 bln.
It reported an operating loss of $11 mln for the second quarter on Friday, compared with a loss of $202 mln a year ago. The loss narrowed because of a drop in the provision for loan losses due to favorable trends in credit quality.
AIG's stock dropped 4.6% to trade at $38.34.