Posted on Tuesday, January 4, 2011
American International Group said on Monday that it had signed $4.3 billion worth of credit deals with 36 lenders — in yet another step by the insurer to get off government life support.
In a filing with the Securities and Exchange Commission, A.I.G. disclosed that it had entered into a $1.5 billion credit agreement for three years on Dec. 23 and a $1.5 billion agreement for 364 days. Its subsidiary Chartis will get another $1.3 billion.
“This success is another important vote of confidence by the market in A.I.G.,” the company’s chief executive, Robert Benmosche, said in a statement. “These credit facilities, combined with the debt offering and contingent liquidity facility, demonstrate that A.I.G. has momentum and has made substantial and impressive progress this year.”
The deals come with several contingencies for the insurer, including an obligation to maintain a specific minimum net worth and to limit its total debt. Another condition of the credit: A.I.G. must repay it credit line with the Federal Reserve Bank of New York.
In early December, A.I.G. disclosed in a S.E.C. filing that it had formalized a deal to repay the New York Fed, including some $20 billion of secured debt. The plan also paves the way for Treasury Department to sell its stake in the insurer.
“Today’s announcement is a milestone in the government’s long-stated efforts to exit our investments in private companies as soon as practical while protecting taxpayers,” Tim Massad, acting assistant Treasury secretary for financial stability, said in a statement about the A.I.G. regulatory filing.
In an effort to pay back taxpayers, A.I.G. has moved to sell assets and raise money over the past six months. The insurer penned a $4.3 billion deal in September to divest AIG Star and AIG Edison life insurance companies. The company has also tapped into the public markets, selling $2 billion of debt on Dec. 2. New York Times
By ADRIENNE CARTER