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AIG CLOSES TWO TRANSACTIONS THAT REDUCE DEBT AIG OWES
FEDERAL RESERVE BANK OF NEW YORK BY $25 BILLION
AIG PLACES AMERICAN LIFE INSURANCE COMPANY (ALICO),
AMERICAN INTERNATIONAL ASSURANCE COMPANY, LTD. (AIA)
IN SPECIAL PURPOSE VEHICLES
NEW YORK, December 1, 2009 – American International Group, Inc. (AIG) today
announced that it has closed two previously announced transactions with the Federal Reserve
Bank of New York (FRBNY) that have reduced the debt AIG owes the FRBNY by $25
billion in exchange for the FRBNY’s acquisition of preferred equity interests in certain newly
formed subsidiaries. As of today, including the $25 billion debt reduction, AIG’s outstanding
principal balance under the FRBNY credit facility is approximately $17 billion, down from
approximately $42 billion, excluding interest and fees. As a result of these transactions, the
total amount available under the facility has been reduced from $60 billion to $35 billion.
These transactions advance AIG’s goal of positioning two of the company’s leading
international life insurance franchises, American International Assurance Company, Limited
(AIA) and American Life Insurance Company (ALICO), for initial public offerings or third
party sale, depending on market conditions and subject to customary regulatory approvals.
“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 Bob Benmosche, AIG chief executive
officer. “Moreover, these transactions position AIA and ALICO, two terrific, unique
international life insurance businesses, for the future.”
Mr. Benmosche noted that AIG would take an incremental charge related to its
prepaid commitment asset in the fourth quarter in connection with the reduction in the total
amount available under the FRBNY credit facility resulting from the closing of the AIA and
ALICO transactions. The prepaid commitment asset was established at the inception of the
FRBNY credit facility on September 16, 2008, in an amount of $23 billion and represented
the value to AIG of the initial $85 billion of credit provided by the FRBNY. Since the
inception of the FRBNY credit facility and through September 30, 2009, AIG has recognized
a total of $11.7 billion of amortization expense, and expects to recognize in the fourth quarter
an additional amount of $5.7 billion, including $5.2 billion of accelerated amortization related
to these transactions. These cumulative charges reflect the reduction of the facility from the
initial amount of $85 billion to $35 billion as well as periodic amortization. Mr. Benmosche
further noted that after the FRBNY facility is fully repaid, the AIG Credit Facility Trust will
continue to hold a preferred voting interest in AIG, currently approximately 79.8 percent,
through the ownership of the Series C Preferred Stock.
-more-

AIG Closes Two Transactions that Reduce Debt AIG Owes FRBNY by $25 Billion
December 1, 2009
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“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 Taiwanbased life insurer Nan Shan,” Mr. Benmosche said.
The AIA and ALICO transactions involve AIG contributing the equity of each of AIA
and ALICO to separate special purpose vehicles (SPVs) in exchange for interests in the SPVs.
Under the terms of the transactions, the FRBNY receives preferred interests with a liquidation
preference in the AIA SPV of $16 billion and with a liquidation preference in the ALICO
SPV of $9 billion.
The liquidation preference of the preferred interests represents a percentage of the
estimated fair market value of AIA and ALICO. AIG holds all of the common interests in the
AIA and ALICO SPVs and will benefit from the fair market value of AIA and ALICO in
excess of the value of the preferred interests as the SPVs monetize their stakes in these
companies in the future.
Until AIG divests a majority of its common interests in AIA and ALICO, AIA and
ALICO will continue to be consolidated in AIG’s financial statements.
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American International Group, Inc. (AIG), a world leader in insurance and financial
services, is the leading international insurance organization with operations in more than 130
countries and jurisdictions. AIG companies serve commercial, institutional and individual
customers through the most extensive worldwide property-casualty and life insurance
networks of any insurer. In addition, AIG companies are leading providers of retirement
services, financial services and asset management around the world. AIG’s common stock is
listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo.
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