Sale funds AIG’s re­pay­ment

Townsville Bulletin - - Investor -

BAILED-OUT in­surance gi­ant AIG has re­paid $ US6.9 bil­lion of a US gov­ern­ment bailout, us­ing pro­ceeds from the sale of its stake in in­dus­try ri­val MetLife.

A Trea­sury state­ment said on Tues­day that Amer­i­can In­ter­na­tional Group used $ US6.6 bil­lion of the $ US9.6 bil­lion it re­ceived from the March 2 Metlife sale to make the re­pay­ment to the Trou­bled As­set Re­lief Pro­gram.

The Trea­sury said it also re­ceived from AIG $ US300 mil­lion the com­pany had re­tained from an ear­lier trans­ac­tion in­volv­ing Metlife.

The re­pay­ment ‘‘ will be used to re­duce an equal por­tion of Trea­sury’s re­main­ing pre­ferred equity in­ter­ests in AIG, which, af­ter to­day’s re­pay­ment, stand at $ US11.3 bil­lion,’’ the depart­ment said.

Once the world’s largest in­surer, AIG re­ceived more than $ US180 bil­lion from US tax­pay­ers to help cover in­vest­ments that col­lapsed amid the 2008-2009 fi­nan­cial cri­sis. The Trea­sury made a to­tal cash in­vest­ment in AIG of ap­prox­i­mately $ US68 bil­lion through TARP, while the Fed­eral Re­serve pro­vided loans to keep the key fi­nan­cial firm afloat.

AIG ob­tained the Metlife stake last year when its sold its Amer­i­can Life In­surance Com­pany to MetLife for $ US16.2 bil­lion, in­clud­ing about $ US7.2 bil­lion in cash. The re­main­ing $ US3 bil­lion of pro­ceeds from the MetLife stake sale were placed in es­crow and may be used later to re­pay the Trea­sury.

‘ ‘ Based on cur­rent mar­ket prices, Trea­sury es­ti­mates that tax­pay­ers will ul­ti­mately re­cover ev­ery dol­lar the US gov­ern­ment in­vested in AIG,’’ the Trea­sury said.

With AIG’s $ US6.9 bil­lion re­pay­ment on Tues­day, tax­pay­ers have now re­cov­ered $ US287 bil­lion, or 70 per cent, of the to­tal Trou­bled As­set Re­lief Pro­gram fi­nan­cial aid.

‘‘ We’re op­ti­mistic that as we con­tinue to wind down TARP, our tem­po­rary in­vest­ments in pri­vate com­pa­nies will ul­ti­mately re­sult in lit­tle or no cost to tax­pay­ers taken as a whole,’’ Tim Mas­sad, acting as­sis­tant sec­re­tary for fi­nan­cial sta­bil­ity, said.

AIG is on track for suc­cess af­ter pay­ing back the US Gov­ern­ment

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