AIG, the insurance group bailed out by the US government in 2008, has raised almost $37bn by selling its Alico life insurance subsidiary and floating its AIA unit in Asia.
Robert Benmosche, chief executive, celebrated a “major milestone in our commitment to repay the American taxpayers” as the company said it would use the proceeds to repay a credit facility held with the Federal Reserve Bank of New York.
Still to come in the restructuring is the conversion of the US Treasury’s preferred shares in AIG into common stock, which will see it take 92.1 per cent of the group’s equity. At Monday’s share price of $41.98, the stake would be valued at $69.7bn, giving the government a paper profit on its investment.
AIG’s rescue led to some of the most dramatic and heated moments of the aftermath of the financial crisis. Bonuses paid to its executives after the $180bn bail-out heightened public anger and contributed to a distrust of government that is expected to hurt Democrats in Tuesday’s midterm elections.
The Treasury’s exit from AIG will take more time. It announced on Tuesday that it would be extending a further $22bn to AIG to allow it to buy assets held by the New York Fed but added that the assets exceeded the value of the new cash infusion.
AIG said it had closed its sale of Alico, a life insurance division, to MetLife, its US peer, for $7.2bn in cash and about $9bn in MetLife securities. AIA’s initial public offering raised $20.5bn.
The announcement of the closing of the Alico deal and the totting up of cash to be paid to the New York Fed come a week after the White House became involved in a heated debate over the outcome of its Wall Street bail-out.
In a report Neil Barofsky, the special inspector general for the troubled asset relief programme (Tarp), accused the Treasury of inconsistent accounting in its new estimate of the final cost of support to AIG, reduced from $45.2bn to $5bn. The White House defended the calculation.