Report: AIG in talks to dump toxic assets

American International Group Inc. is reportedly in talks with JPMorgan Chase & Co. to spin off some its subprime assets into a new company, according to The New York Post. The partnership between the insurer and the investment bank, both in New York, would create a “good bank/bad bank” structure, which would allow AIG to unload some of the corrosive credit default swaps from its balance sheets, insiders told the Post. An unnamed official told the paper that the discussions between the financial giants are “very serious” and described the amount of assets AIG plans to offload as “dwarfing” the size of similar transactions performed in the past. AIG’s credit default swaps, which are linked to subprime mortgages, have dragged the firm’s earnings into the red for three straight quarters. Most recently, the insurer reported a $5.36 billion loss for the second quarter, down from $4.3 billion in profits for the same period a year earlier. AIG vigorously denied the report. “It is pure speculation, we are continuing to work on AIG’s strategic business review, expense control and reducing our financial risk. We’ll report our progress [on the review] on Sept. 25,” the firm said in a statement.