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AIG expects to normalise operations following $85 billion bailout
American International Group (AIG) said it will continue to honour its commitments to policyholders after it was given a two-year $85 billion secured revolving credit facility from the Federal Reserve Bank of New York.
- Staff Report
- Published: 13:45 September 23, 2008
Dubai: American International Group (AIG) said it will continue to honour its commitments to policyholders after it was given a two-year $85 billion secured revolving credit facility from the Federal Reserve Bank of New York.
"The AIG Board has approved this transaction based on its determination that this is the best alternative for all of AIG's constituencies, including policyholders, customers, creditors, counter parties, employees and shareholders. AIG is a solid company with over $1 trillion in assets and substantial equity, but it has been recently experiencing serious liquidity issues," the AIG Board said in a statement.
The statement continued: "We believe the loan, which is backed by profitable, well-capitalized operating subsidiaries with substantial value, will protect all AIG policyholders; address-rating agency concerns and gives AIG the time necessary to conduct asset sales on an orderly basis."
"We expect that the proceeds of these sales will be sufficient to repay the loan in full and enable AIG's businesses to continue as substantial participants in their respective markets. In return for providing this essential support, American taxpayers will receive a substantial majority ownership interest in AIG."
AIG assured that its businesses in life insurance, general insurance and retirement services will continue to operate normally and will have adequate capital to meet their obligations to policyholders.
"The insurance policies written by AIG companies are direct obligations of its regulated subsidiary insurance companies around the world. These companies are well capitalized and meet or exceed local regulatory capital requirements. The companies continue to operate in the normal course to meet obligations to policyholders," AIG said.
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