American International Group is mulling over whether to form a separate company to hold billions in securities, the New York Post has learned.

According to sources familiar with the matter, the largest U.S. insurer is working with investment bank JPMorgan Chase to arrange what is known in Wall Street lingo as a "good bank/bad bank," or in AIG's case a "good insurer/bad insurer," structure.

The arrangement would enable AIG to offload some of its more toxic assets from its balance sheet.

Sources say a plan has not yet been cemented but a scenario similar to what that Swiss investment bank UBS used to rid itself of some of its troubled real-estate securities is being mulled by AIG officials, said one Wall Street official.

For