Allianz, Flowers Said to Have Bid for AIG Before Fed Takeover

By Zachary R. Mider and Erik Holm

Sept. 17 (Bloomberg) -- Allianz SE, Europe's largest insurer, made an offer to invest in American International Group Inc. that was rejected by the U.S. insurer two days before it accepted a government takeover, said two people with knowledge of the bid.

Allianz teamed with J.C. Flowers & Co., the New York-based private equity firm run by J. Christopher Flowers, in an effort to help New York-based AIG stave off a cash crunch, according to the people who declined to be identified because the talks were private.

Sabia Schwarzer, a spokeswoman for Munich-based Allianz, declined to comment. Flowers and Nicholas Ashooh, an AIG spokesman, didn't return calls seeking comment.

AIG, the biggest U.S. insurer by assets, accepted an $85 billion loan from the government yesterday in exchange for a 79.9 percent stake. Edward Liddy, the former Allstate chief executive officer, will replace Robert Willumstad as AIG's CEO, said another person who is familiar with that situation. All three of the people spoke on condition of anonymity.

The U.S. Federal Reserve said it offered the loan because of the risk that an AIG failure would threaten the stability of world financial markets.

To contact the reporter on this story: Zachary R. Mider in New York at zmider1@bloomberg.net