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NEW YORK: Bailed-out US insurance giant AIG said Tuesday it had given an equity stake in two subsidiaries to the Federal Reserve in a move to cut its debt to the central bank by 25 billion dollars.
American International Group said it had transferred ownership to the Federal Reserve Bank of New York parts of two international subsidiaries: American Life Insurance Company (ALICO) and American International Assurance Company (AIA).
The action reduces AIG's outstanding principal balance to the Fed to 17 billion dollars, excluding interest and fees.
AIG agreed to transfer the holdings to two special entities in which the central bank will hold a stake, allowing it to move forward on a spin-off or sale of the subsidiaries.
"Today's announcement that we have reduced our debt to the Federal Reserve Bank of New York by 25 billion dollars sends a clear message to taxpayers: AIG continues to make good on its commitment to pay the American people back," said Robert Benmosche, AIG chief executive.
"Moreover, these transactions position AIA and ALICO, two terrific, unique international life insurance businesses, for the future."
AIG was the largest single recipient of US bailouts amid the global financial crisis, with the government pumping more than 170 billion dollars into the firm to keep it afloat and taking a controlling stake in the group in the process.
Once the world's biggest insurer, AIG was on the brink of bankruptcy in September 2008 when the government offered a financial lifeline in exchange for an 80 percent stake in the company.
The company was in trouble after backing trillions of dollars in risky financial products amid a US home mortgage meltdown that triggered the global financial meltdown.
With the government effectively in control, AIG has been moving to sell off a number of assets in an effort to restore its financial health.
"We continue to focus on stabilising and strengthening our businesses, but expect continued volatility in reported results in the coming quarters, due in part to charges related to ongoing restructuring activities," Benmosche said. - AFP/de
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