Restructuring broken knots

U.S. officials are in advanced talks over a restructuring that would divide the insurer into at least three government-controlled divisions in an attempt to keep it afloat, the Financial Times reports, citing people close to the situation. nder the restructuring plan, the government would swap its current 80% holding in the insurer for large stakes in three units -- AIG's Asian operations, its international life insurance business and its U.S. personal lines business. A fourth unit, made up of AIG's other businesses and troubled assets, also could be formed, according to the Financial Times.

The U.S., in return, would relax the terms, or even cancel a large portion of a five-year, $60 billion loan to AIG and convert $40 billion worth of preferred stock into shares.