AIG Agrees on Plan to Repay U.S. Taxpayers for Bailout Finally, after many months of preparation and planning, American International Group (AIG) announced Thursday that it had entered into an agreement with the Treasury Department and the Federal Reserve Bank of New York about how it will repay its obligations to the U.S. government.

"This is a pivotal milestone as we deliver on our long-standing promise to repay taxpayers, and we thank the American people for their support," said AIG President and CEO Robert H. Benmosche.

During the financial crisis, AIG's bets on mortgage-backed securities and other assets went sour and threatened to topple the giant insurance and finance company. Since its near-collapse in September 2008, AIG has received a total of $182.3 billion in bailout funds. But recently, AIG has been selling off assets to strengthen its financial position, repay the government and regain its independence.

The agreement lays out how AIG will repay the New York Fed in full, "and sets in motion the steps for the U.S. Treasury to exit its ownership of AIG over time," Benmosche says. "With this plan, we remain on track to emerge with one of the largest, most diversified property and casualty companies in the world, a leading U.S. life insurance and retirement savings operation, and other businesses that enhance this nucleus."

Once the New York Fed has been paid in full, the U.S. Treasury will exchange the $49.1 billion in AIG preferred shares it holds due to the TARP bailout for approximately 1.655 billion shares of AIG common stock. In addition, AIG will issue up to 75 million warrants with a strike price of $45 per share to existing common shareholders. After the exchange, the Treasury will own 92.1% of the common stock of AIG, but will then sell its stake on the open market over time.

First, though, AIG expects to repay the entire $20 billion it borrowed from the New York Fed under the senior secured credit facility. It plans to do so with its own resources, as well as with funds raised through the sale of assets, including the initial public offering of its Asian life insurance business, American International Assurance Company, and the pending sale of its foreign life insurance company, American Life Insurance Company, to MetLife (MET).

To finish repaying the New York Fed, AIG will also draw more money from the Troubled Asset Relief Program to purchase the reserve bank's interest in the insurer's assets. AIG will then immediately transfer these preferred interests to the U.S. Treasury. AIG will then apply proceeds from future asset sales as well as from Thursday's announced sales of its Japanese units to retire the government's stake in these assets.

AIG expects all this to happen before the end of the first quarter of 2011, subject to regulatory approvals and other closing conditions.

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Charles

The money that will be refunded after all holiday bonuses are paid, costs for the annual Swiss ski trip, covered and all executive offices get a million dollar makeover. Then AIG will gladly refund what's left, to the taxpayers who so kindly bailed them out.

October 02 2010 at 8:55 PM Report abuse rate up rate down Reply
tenderlies1

In Most cases all you have to do is check a screen name and you can tell that most likely you have a drop out from school living with their parents and they know nothing of politics so they just make off the wall statements, name calling as well as abusive language to try and offend others that are truly concerned at where our country is at today. They could care less who is elected, could care less that people in our military are losing their lives every day or that we may well hit a depression and all these comps will be history because we can no longer afford and internet account.

October 01 2010 at 10:27 AM Report abuse +1 rate up rate down Reply
cigna

AIG cannot be trusted on they're word or by contract. As an insured client of many years they consealed information from me on a call reporting an auto claim that they had not entered my payment sent in 20 days prior and denide me coverage. A cituation that could have be corrected imediatly with a phone payment right then and there. They received my money and delayed posting it by one day so as say I was late knowing I called in a claim. It cost me thousands out of pocket and years off my life. I am so disappointed that I have to contribute to thier bailout and wish them to die as a business. I will never be a customer of AIG or any out of state insurance company again without a local agent. Please watch our backs and let them fail as they deserve.

September 30 2010 at 9:10 PM Report abuse +1 rate up rate down Reply
tnjr

Actually, this is a good deal. In the 4 quartely sales of Citigroup stock, the government made up to 10 BILLION in each sale. This is after the govenment got 8% for a year on the preferred stock. I had a preferred that had to be converted and I'm up 20%, and the government got a better deal then me. So for all you who are crying about TARP, you made 8% interest and a 20% profit on Citi alone. The JP Morgan and Goldman warrents brought in a bundle too. And AIG is not a bank, it's an insurance company and insurance is backed by the state it's issued in. So if AIG went belly up, how do you think your state would have to back the policies, with YOUR tax dollars. So before you cry about TARP, demand the government tells you where all these Billions in profits are going.

September 30 2010 at 4:53 PM Report abuse rate up rate down Reply
rexpbass

AIG reminds me of ENRON ! Make sure you have a 55 Gallon of Vasline you'll need it. GM was said paid back BUT the Gov't owns 61% stock? So if you buy a GM you pay for the car the dividens the taxes all to the Gov't. What a great deal to pay triple taxes of what you buy! And Aig Insurance sure CEO gets a millon dollar perk and Gov't. get 2/3 in taxes of policy! What a GREAT Bailout this has been???? And GOOD luck on your NEW GM!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

September 30 2010 at 4:22 PM Report abuse rate up rate down Reply
galaxy4262a

for you people that has more then 250.000.00 in any bank you better be carefull you mite be loosing it if you continu useing the banks if they fold and go under you loose all but the 250 , aig owns a lot of thease banks out their and some has gone under so look out ,

September 30 2010 at 4:10 PM Report abuse +1 rate up rate down Reply
galaxy4262a

aig knows it would take years and years befor we got our tax money back , thats why they are offering this deal and gues what obama will back it when he sees his cut that know one knows about .

September 30 2010 at 4:06 PM Report abuse +2 rate up rate down Reply
galaxy4262a

this is tax payers money not the feds or gov its ours and we want it back now , if you want to make thease people pay big then go to your banks and take your money out , keep their hands off it and they wont have it to use , i did i have mine and the banks dont like it look at the cost their raising fees and doing all kinds of ways the us gov is letting them i say put a stop to them all take your money out make them pay.

September 30 2010 at 4:00 PM Report abuse +3 rate up rate down Reply
wvsd68

My comment was posted and now it is gone. Who have authority to remove the comments? I repeat, No way! AIG must pay $182 billions back in cash as TARP gave AIG cash in past. Stocks are worthless and subject to fluctuation

September 30 2010 at 3:56 PM Report abuse +1 rate up rate down Reply
spaceguy855

Once the New York Fed has been paid in full, the U.S. Treasury will exchange the $49.1 billion in AIG preferred shares it holds due to the TARP bailout for approximately 1.655 billion shares of AIG common stock. In addition, AIG will issue up to 75 million warrants with a strike price of $45 per share to existing common shareholders. After the exchange, the Treasury will own 92.1% of the common stock. Let's take a moment before we start dancing to understand what 92.1% ownership really means. Think about how long it will take the Gov to unwind these shares. It will take YEARS and YEARS unless the Gov sells the shares at a fire sales to sell the shares back into the open market. Think about the dilutive effect on the price of the existing stock by issuing 1.655 BILLION NEW shares in the company. The price of the stock will immdiately drop with such a HUGE stock offereing.

September 30 2010 at 3:54 PM Report abuse +3 rate up rate down Reply