The insurer, which told investors recently that it expects regulators to designate it as systematically risky, intends to close down its AIG Federal Savings Bank unit as soon as possible thereafter, according to combined press reports.
The company confirmed that it has discussed a sale of the unit with several banks.
"It's a business that doesn't makes sense to be in," Robert Benmosche, AIG’s chief executive, told Reuters. "We're exploring a sale. We're exploring turning it into a trust vehicle rather than a savings institution with deposits."
Benmosche declined to say what he expected to net for the unit, which had assets of roughly $1 trillion as of June 30, according to the Federal Deposit Insurance Corp.
Though AIG hopes to sell its savings and loan, Benmosche said he anticipates the insurer would remain in mortgage lending.
AIG is also the parent of United Guaranty, one of the nation’s largest mortgage insurance companies, according to figures compiled by National Mortgage News and the Quarterly Data Report.
"We are also now looking at ways we could become direct investors in mortgages," he added. "We are going to do more of our own direct lending, both commercially and residentially."
AIG recorded $19.3 billion in mortgage loans in the third quarter, up 0.5% from a year earlier. The company also wrote $10.7 billion in mortgage insurance in the quarter, nearly twice as much as in the third quarter of 2011.
The company is among several nonbank firms regulators are expected to designate as systematically important financial institutions under the Dodd-Frank Act. The designation would subject the insurer to minimum leverage and risk-based requirements, as well as limits on proprietary trading.
AIG, which received a bailout from the government in 2008, remains roughly 16% owned by the Treasury Department, according to the company’s latest quarterly filling with the Securities Exchange Commission.