American International Group has completed a pair of transactions to reduce its debt with the Federal Reserve Bank of New York by $25 billion.
The New York-based insurer announced that the N.Y. Fed would receive preferred interests with a liquidation preference worth $16 billion in American Life Insurance Co. (ALICO) and $9 billion in American International Assurance Co. Ltd. (AIA). AIG will contribute the equity of both ALICO and AIA into special purpose vehicles, thus preparing the two subsidiaries for initial public offerings or third-party sales.
AIG announced that with the $25 billion debt reduction, its outstanding principal balance under the N.Y. Fed credit facility is $17 billion and as a result of the transactions, the total amount available under the facility is $35 billion, reduced from $60 billion.
In a separate statement, AIG announced that it is moving forward with the separation of ALICO, an international life insurance franchise, in a move ALICO Chairman Rodney O. Martin Jr., said shifts the subsidiary “toward independence and complements the substantial progress we have achieved this year in repositioning ALICO and reinvigorating the brand in all markets.
“Securing the value of this well-capitalized global insurer is in the best interests of policyholders, distribution partners, and the American taxpayer,” Martin said in a statement. “We are very excited to begin this new chapter in the life of one of the world’s leading international life insurance companies.”
Robert H. Benmosche
“Today’s announcement that we have reduced our debt to the Federal Reserve Bank of New York by $25 billion sends a clear message to taxpayers: AIG continues to make good on its commitment to pay the American people back,” said Robert Benmosche, AIG’s chief executive officer, in a statement. “Moreover, these transactions position AIA and ALICO, two terrific, unique international life insurance businesses, for the future.”
Benmosche also noted that AIG expects to additional amortization expenses totaling $5.7 billion in the fourth quarter of this year.
“We continue to focus on stabilizing 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, such as the previously announced loss that we expect to recognize in the upcoming quarter related to our announced agreement to sell our Taiwan-based life insurer Nan Shan,” Mr. Benmosche said.
AIG closes pair of deals, reduces debt by $25 billion via IFAwebnews.com .
No related posts.
