Nov. 24 (Bloomberg) -- American International Group Inc., the insurer bailed out by the government, will remove “AIG” from the name of a U.S. auto unit and cut 6.6 percent of jobs there to improve chances of finding a buyer for the operation.

AIG will start calling its aigdirect.com business 21st Century Insurance in January, reverting to the brand of a California-based car insurer acquired last year, said Nicholas Ashooh, a spokesman for AIG. The company will also close offices in 12 cities, AIG said in an Oct. 21 letter to workers. The unit had about 5,500 employees as of September 2007.

“They probably weighed the benefits and costs and figured that it has more worth labeled as 21st Century than as AIG Direct,” said Jeremy Bowler, a director at J.D. Power and Associates who studies insurer brands. “Every consumer has so many choices, and AIG’s problems have been so highly publicized - - why would someone choose a company with a bad rap?”

AIG is selling businesses including auto insurance, U.S. life coverage and a plane-leasing unit to repay the government loan that saved it from bankruptcy in September. The New York- based insurer was overwhelmed by bad bets on U.S. housing and has posted about $43 billion in four straight quarterly net losses.

Rebranding the auto unit “will make our business more attractive to a prospective buyer,” Tony DeSantis, head of AIG’s personal auto group, said in a Nov. 17 letter. Ashooh confirmed the letter’s contents today in an interview.

AIG will launch new television commercials, as well as a revamped logo and Web site on Jan. 5, according to the letter.

‘Thoughtful Decision’

The move is a reversal for AIG, which has used the slogan “The Strength to Be There” in advertisements. The company said in a September 2007 statement that its consolidated auto insurer would be named aigdirect.com.

“It’s a thoughtful decision,” said Jay Fishman, chief executive officer of AIG competitor Travelers Cos., in an interview today. “21st Century is a well-regarded name.”

AIG climbed 17 cents to $1.77 at 4:07 p.m. in New York Stock Exchange composite trading. The shares have declined about 97 percent this year.

AIG, which has owned a stake in 21st Century since 1994, acquired in September 2007 the remaining 39 percent of shares for $813 million. The insurer sought a larger presence selling policies over the Internet and telephone, the model used by Geico Corp., owned by Warren Buffett’s Berkshire Hathaway Inc.

The auto unit may fetch about $2 billion, Gary Ransom, analyst at Fox-Pitt Kelton Cochran Caronia Waller, said in an Oct. 3 research note. AIG was the eighth-largest insurer of private cars in the U.S. last year, according to the National Association of Insurance Commissioners.

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