UPDATE 4-AIG renames property-casualty arm ahead of sale

* AIG property-casualty arm rebranded under Chartis name

* AIG to put equity of businesses into separate co

* Steps to prepare Chartis for IPO or stake sale

* New signage being mounted at Manhattan headquarters

* Shares rise nearly 4 percent
(Adds details on new name of property-casualty business,
background on timing of developments, share price)

By Lilla Zuill

NEW YORK, July 27 (Reuters) - Bailed-out insurer American
International Group Inc (AIG.N) rebranded its property-casualty
business under the name Chartis on Monday and said it would put
the equity for the division into a separate company -- key
steps toward a sale of at least part of the business.

A special-purpose vehicle formed by AIG will consist of
Chartis' North American commercial insurance units, foreign
general insurance, and private client group.

"This is a significant milestone, as it sets up the legal
structure" for Chartis to operate independently, Kristian Moor,
the newly named CEO of the property-casualty business, told
Reuters in an interview.

The Chartis name replaces the property-casualty companies'
previous branding as "AIG" or "AIU," the name long used by
these businesses outside the United States.

Plans are also afoot to replace the AIG sign removed months
ago from the front of the property-casualty division's New York
headquarters with the Chartis name, and new compass logo.

Chartis is building on plans first announced in March that
distance itself from parent company AIG, after it lost more
than $99 billion in 2008. Chartis, in contrast, was profitable,
earning more than $2 billion.

NEXT STEPS

Chartis plans to sell a stake of up to 20 percent in either
an initial public offering or in transactions with private
investors, cutting AIG's ownership, Moor said.

The offering could raise billions of dollars for AIG,
helping it to repay the U.S. government, which has committed up
to $180 billion in aid, including about $85 billion in loans.

But there are a few hurdles to leap first.

The company needs its own board of directors, something it
expects will be in place by year end, said Moor, who was
previously president of the division and retains that title.

It also must choose bankers to represent it in an IPO or
private offering, Moor added, and will likely do so in the next
few months.

Chartis will also have to unwind or formalize agreements
for services that AIG provides to some of its operations. "We
will either do the services ourselves or we could have a shared
services agreement with AIG," said Moor.

He added that the timing of the stake sale, likely next
year, will depend on market conditions.

The company plans to remain based in its waterfront
headquarters in lower Manhattan, and in an initial public
offering would most likely list its shares in New York.

Chartis, which employs about 34,000 worldwide, may need to
hire additional staff before a stake sale and plans to add
rather than lay off people, said Moor.

STRONG POSITION

Chartis is undertaking the painful process of separating
from AIG after a long history together. The property-casualty
business has been in operation since 1919, as a predecessor
company to modern-day AIG and a keystone of the insurer's claim
to global dominance.

AIG, once the world's biggest insurer, nearly collapsed
last year because of credit default swaps entered into by its
financial products unit. These left the insurer on the hook for
billions of dollars of payouts to counterparties.

Moor wants to make it clear that the property-casualty
businesses remain financially strong. He says the company has
no debt, and its operations have not needed the support of
federal funding.

Chief Financial Officer Robert Schimek added that the
company was "very well capitalized," with regulatory capital
exceeding $32 billion at the end of 2008. Its operations are
not in need of outside capital, he added.

The company, long known globally as AIU, chose the name
"Chartis," the Greek word for map, to underscore its worldwide
reach, with operations in 160 countries and jurisdictions
serving more than 40 million customers.

AIG shares were up 49 cents, or 3.9 percent, at $12.95 in
afternoon trading on the New York Stock Exchange. The shares
have fallen 97 percent in the last year, taking into account a
recent 1-for-20 reverse stock split.
(Reporting by Lilla Zuill, additional reporting by Jonathan
Stempel; editing by John Wallace, Gerald E. McCormick and
Matthew Lewis)