AIG reaches debt payment deal
By Stephen Bernard |
October 1, 2010, Friday
|
Print Edition
Print Edition
AIG has reached a deal to repay billions of dollars it received during the credit crisis.
The plan announced yesterday could return a profit to taxpayers in the United States who footed the bill for AIG's near collapse in 2008.
"This is a pivotal milestone as we deliver on our long-standing promise to repay taxpayers," said Robert Benmosche, AIG's CEO.
Until this point, AIG was primarily repaying the government as it took in money from asset sales, but there was no timeline for repayment.
New York-based American International Group Inc was one of the hardest hit financial companies by the credit crisis and received a bailout package worth as much as US$180 billion from the government, which received an 80 percent stake in the company in return.
The insurance giant was not undone by its traditional business, but for dealing in the complex derivatives and securities market that got so many financial companies into trouble.
The government stepped in to rescue AIG because the insurer worked with hundreds of financial institutions throughout the world, believing at the time that a collapse of AIG would further hurt the already fragile credit markets, which had been shaken by the bankruptcy of Lehman Brothers.
As part of AIG's exit plan, the US Treasury Department will swap preferred shares it holds in AIG for common stock and then sell those over time. AIG will also repay loans it got from the Federal Reserve Bank of New York.
As of June 30, AIG still had US$132.1 billion in outstanding aid from the government, including US$49.1 billion in loans from the Treasury Department.
The government will receive about 1.66 billion shares of AIG common stock in exchange for the US$49.1 billion in preferred shares it holds in AIG. Those preferred shares were issued through the government's Troubled Asset Relief Program.
AIG owes the Federal Reserve Bank of New York about US$20 billion. It plans to repay that debt, in part, through earnings it generates and the sale of subsidiaries. AIG has been selling some of its units since it received the initial bailout in September 2008. It is in the process of selling American Life Insurance Co to MetLife Inc and spinning off American International Assurance Co into a new company.
AIG said in a separate statement yesterday that it reached a deal to sell two Japanese life insurance units to Prudential Financial Inc for about US$4.2 billion in cash. That money will also going toward repaying the government bailout.
The plan announced yesterday could return a profit to taxpayers in the United States who footed the bill for AIG's near collapse in 2008.
"This is a pivotal milestone as we deliver on our long-standing promise to repay taxpayers," said Robert Benmosche, AIG's CEO.
Until this point, AIG was primarily repaying the government as it took in money from asset sales, but there was no timeline for repayment.
New York-based American International Group Inc was one of the hardest hit financial companies by the credit crisis and received a bailout package worth as much as US$180 billion from the government, which received an 80 percent stake in the company in return.
The insurance giant was not undone by its traditional business, but for dealing in the complex derivatives and securities market that got so many financial companies into trouble.
The government stepped in to rescue AIG because the insurer worked with hundreds of financial institutions throughout the world, believing at the time that a collapse of AIG would further hurt the already fragile credit markets, which had been shaken by the bankruptcy of Lehman Brothers.
As part of AIG's exit plan, the US Treasury Department will swap preferred shares it holds in AIG for common stock and then sell those over time. AIG will also repay loans it got from the Federal Reserve Bank of New York.
As of June 30, AIG still had US$132.1 billion in outstanding aid from the government, including US$49.1 billion in loans from the Treasury Department.
The government will receive about 1.66 billion shares of AIG common stock in exchange for the US$49.1 billion in preferred shares it holds in AIG. Those preferred shares were issued through the government's Troubled Asset Relief Program.
AIG owes the Federal Reserve Bank of New York about US$20 billion. It plans to repay that debt, in part, through earnings it generates and the sale of subsidiaries. AIG has been selling some of its units since it received the initial bailout in September 2008. It is in the process of selling American Life Insurance Co to MetLife Inc and spinning off American International Assurance Co into a new company.
AIG said in a separate statement yesterday that it reached a deal to sell two Japanese life insurance units to Prudential Financial Inc for about US$4.2 billion in cash. That money will also going toward repaying the government bailout.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
