NEW YORK—Bailed-out insurer American International Group Inc. (AIG) has raised around $37 billion in order to repay the U.S. government, which it owes around $100 billion in debt.
AIG, the New York-based insurance giant, received around $20.5 billion in an initial public offering of its Hong Kong-based Asia business, American International Assurance (AIA). Shares of AIA increased even further, up to $35.7 billion, late last week in Hong Kong.
British insurance company Prudential Plc originally reached an agreement with AIG to purchase AIA for around $35.5 billion for an even bigger windfall, but backed out after shareholder opposition.
On Monday, AIG completed the sale of its Japanese arm, American Life Insurance Co. (Alico) to MetLife Inc. for $16.2 billion, $7.2 billion of which is in cash—bringing the total mount raised to repay the U.S. Treasury and the Federal Reserve Bank of New York to $36.7 billion.
“We promised the American taxpayers we would repay them and the initial public offering of AIA last week and the completion of the Alico transaction move us closer to delivering on our promise,” AIG CEO Robert Benmosche said in a statement.
After AIG repays the Fed, from which it owes around $20 billion, it would repay the Treasury with the proceeds. The rest of the Treasury debt, which amounts to roughly $50 billion, would be converted into equity to be sold over time.
The Treasury and the Fed gave AIG a combined $182 billion in September of 2008 to avert a bankruptcy of the insurer, which was under duress due to its position as one of the largest issuers of credit default swaps.
AIG, the New York-based insurance giant, received around $20.5 billion in an initial public offering of its Hong Kong-based Asia business, American International Assurance (AIA). Shares of AIA increased even further, up to $35.7 billion, late last week in Hong Kong.
British insurance company Prudential Plc originally reached an agreement with AIG to purchase AIA for around $35.5 billion for an even bigger windfall, but backed out after shareholder opposition.
On Monday, AIG completed the sale of its Japanese arm, American Life Insurance Co. (Alico) to MetLife Inc. for $16.2 billion, $7.2 billion of which is in cash—bringing the total mount raised to repay the U.S. Treasury and the Federal Reserve Bank of New York to $36.7 billion.
“We promised the American taxpayers we would repay them and the initial public offering of AIA last week and the completion of the Alico transaction move us closer to delivering on our promise,” AIG CEO Robert Benmosche said in a statement.
After AIG repays the Fed, from which it owes around $20 billion, it would repay the Treasury with the proceeds. The rest of the Treasury debt, which amounts to roughly $50 billion, would be converted into equity to be sold over time.
The Treasury and the Fed gave AIG a combined $182 billion in September of 2008 to avert a bankruptcy of the insurer, which was under duress due to its position as one of the largest issuers of credit default swaps.
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