AIG CEO Says U.S. Taxpayers to be Repaid by 2013
April 8, 2010 – Officials for taxpayer-rescued American International Group (AIG) have announced the insurer likely will repay its entire debt to U.S. taxpayers before 2013.
Recent deals in which AIG officials sold or reached agreements to sell large overseas insurance subsidiaries, including Asia-based American Life Insurance Company (Alico) to MetLife for $15.5 billion and American International Assurance (AIA) to Prudential for $35.5 billion, have boosted AIG’s capital to the point its top executive says company officials should be able to begin negotiating a final settlement on its federal debt before 2013.
No specific repayment date has been targeted, but AIG officials said they are ready to begin detailed discussions of an eventual exit strategy for AIG to completely repay its current $102 billion debt to U.S. taxpayers, AIG Chief Executive Officer Robert Benmosche told Reuters. AIG officials hope to map out a clear exit strategy over the next year or so, according to Reuters. The debt must be repaid by Sept. 16, 2013, in accordance with terms of what was a nearly $183 billion, taxpayer-backed line of credit extended to AIG in 2008.
Although it is headquartered in Delaware, Alico mostly does business overseas in 50 nations and is one of the largest life insurance companies in lucrative, emerging Asian markets. Industry analysts say $15.5 billion is a large amount to pay for a company valued at about $4 billion in 2008, but Alico has a large share of lucrative emerging life insurance markets in China and other parts of Asia.
Hong Kong-based AIA has been in business more than 90 years and is one of the largest insurers in Asia with more than $60 billion in assets and about 20 million policyholders. AIG officials earlier weighed an initial public offering of AIA shares on the Hong Kong stock exchange when initial interest in purchasing the company was light during tightened global credit markets. Purchasing AIA would make Prudential one of the largest insurance companies in the Asian market while giving AIG a significant boost in funds with which to repay its debt to U.S. taxpayers.
Formerly the world’s largest insurance company, AIG became the world’s most indebted insurer after federal officials in September 2008 agreed to extend the company an $85 billion loan in exchange for an 80 percent share of company stocks. Federal officials said allowing AIG to go bankrupt would have a devastating impact on U.S. and international financial markets and later revised lending terms, making it a $153 billion loan with a lower interest rate and longer repayment period.
Under a later revision, the Federal Reserve provided AIG $60 billion in loans and the U.S. Treasury another $40 billion so company officials could buy up preferred stock. Federal officials also approved $53 billion to purchase the company’s risky mortgage-backed assets and other debt contracts. The latest bailout adjustment boosted to nearly $183 billion the total amount available to AIG officials.
AIG is attempting to sell off its overseas life insurance units and other subsidiaries to repay its debt and has raised nearly $12 billion through sales of subsidiary units and other assets. Company officials intend to focus future business on property and casualty insurance markets and maintain a minority financial interest in some profitable overseas ventures.
AIG, MetLife Agree on $15.5 Billion Deal for Asian Life Insurer
March 8, 2010 – Officials for American International Group (AIG) today announced they have finalized a $15.5 billion deal to sell the insurer’s Asia-based life insurance subsidiary to MetLife.
The deal for AIG’s American Life Insurance Company, popularly called “Alico,” is the second major sale announced by AIG during the past week and means the two transactions combined will allow the insurer to pay down about $51 billion of its remaining $102 billion in debt remaining from AIG’s $182.5 billion, taxpayer-backed federal debt. AIG last week announced a $35.5 billion deal to sell its American International Assurance firm to Prudential.
Initially planned to be concluded by the end of February, the deal for Alico was put on hold while MetLife officials look into potential federal tax issues related to how Alico conducts its business overseas. Headquartered in Delaware but primarily doing business in Asia, Alico officials routinely withhold federal taxes from life insurance distributions made to its U.S.-based customers. But because Alico does most of its business overseas, the firm does not withhold federal taxes from distributions to non-U.S. citizens living in other nations.
Concerned U.S. officials might take exception to Alico’s tax-withholding methods, officials for MetLife and AIG are seeking a clarification on the matter from the U.S. Internal Revenue Service. Company officials say the request for a clarification from federal officials is more of a formality and likely won’t delay the potential sale occurring by the end of the month. Selling Alico for $15.5 billion would be the second-largest transaction done by AIG as company officials attempt to repay its staggering debt to U.S. taxpayers.
Alico mostly does business overseas in 50 nations and is one of the largest life insurance companies in lucrative, emerging Asian markets. Industry analysts say $15.5 billion is a large amount to pay for a company valued at about $4 billion in 2008, but Alico has a large share of lucrative emerging life insurance markets in China and other parts of Asia.
The deal means the Federal Reserve Bank of New York would get about $9 billion as partial reimbursement for the taxpayer-funded bailout of the nearly bankrupted insurer in 2008. AIG would retain the remaining $6 billion. The $9 billion would be used to buy back preferred shares of AIG stock the federal government owns as collateral for rescuing the ailing insurer in 2008.
Formerly the world’s largest insurance company, AIG became the world’s most indebted insurer after federal officials last year agreed to extend the company an $85 billion loan in exchange for an 80 percent share of company stocks. Federal officials said allowing AIG to go bankrupt would have a devastating impact on U.S. and international financial markets and later revised lending terms, making it a $153 billion loan with a lower interest rate and longer repayment period.
Report: AIG to get $35.5 Billion for Asia-based Subsidiary
March 2, 2010 – Officials for insurer American International Group (AIG) are close to securing $35.5 billion for a lucrative Asia-based life insurance company from England-based Prudential.
The board of directors for AIG on Sunday reportedly approved selling Asia-based American International Assurance (AIA), but final terms are yet to be agreed upon. A preliminary agreement has Prudential officials paying $25 billion in cash with another $10.5 billion in securities, Reuters reported on March 1.
Based in Hong Kong, AIA has been in business more than 90 years and is one of the largest insurers in Asia with more than $60 billion in assets and about 20 million policyholders. AIG officials earlier weighed an initial public offering of AIA shares on the Hong Kong stock exchange when initial interest in purchasing the company was light during tightened global credit markets. Purchasing AIG makes Prudential one of the largest insurance companies in the Asian market, and company officials plan to finance about $20 billion through agreements with JPMorgan Chase & Co., Credit Suisse and HSBC, according to Reuters.
AIG officials would pay about $16 billion to the Federal Reserve Bank of New York as partial restitution of the massive debt AIG owes U.S. taxpayers. AIG currently owes about $25 billion to the Federal Reserve Bank of New York and another $45 billion in preferred AIG shares held by the federal government as collateral. AIG also is in talks with MetLife officials to sell its Asia-based American Life Insurance Company (Alico) for about $15.5 billion, from which the federal government reportedly would be paid about $9 billion toward AIG’s debt.
Formerly the world’s largest insurance company, AIG became the world’s most indebted insurer after federal officials in September 2008 agreed to extend the company an $85 billion loan in exchange for an 80 percent share of company stocks. Federal officials said allowing AIG to go bankrupt would have a devastating impact on U.S. and international financial markets and later revised lending terms, making it a $153 billion loan with a lower interest rate and longer repayment period.
Under a later revision, the Federal Reserve provided AIG $60 billion in loans and the U.S. Treasury another $40 billion so company officials could buy up preferred stock. Federal officials also approved $53 billion to purchase the company’s risky mortgage-backed assets and other debt contracts. The latest bailout adjustment boosted to nearly $183 billion the total amount available to AIG officials.
AIG is attempting to sell off its overseas life insurance units and other subsidiaries to repay its debt and has raised nearly $12 billion through sales of subsidiary units and other assets. Company officials intend to focus future business on property and casualty insurance markets and maintain a minority financial interest in some profitable overseas ventures.
Federal Tax Issue Puts Brakes on AIG, MetLife Deal
Feb. 18, 2010 – A $15 billion deal for the sale of a leading Asia-based insurance company being negotiated between MetLife and American International Group (AIG) officials has hit a tax-related snag.
Initially planned to be concluded by the end of February, the deal for AIG’s subsidiary American Life Insurance Company, popularly known as “Alico,” has been puts on hold while MetLife officials look into potential federal tax issues related to how Alico conducts its business overseas. Headquartered in Delaware but primarily doing business in Asia, Alico officials routinely withhold federal taxes from life insurance distributions made to its U.S.-based customers. But because Alico does most of its business overseas, the firm does not withhold federal taxes from distributions to non-U.S. citizens living in other nations.
Concerned U.S. officials might take umbrage at Alico’s practice, officials for MetLife and AIG are seeking a clarification on the matter from the U.S. Internal Revenue Service, Reuters reported yesterday. Company officials say the request for a clarification from federal officials is more of a formality and likely won’t delay the potential sale occurring by the end of the month. Selling Alico for $15 billion would be the largest single transaction done by AIG as company officials attempt to repay its staggering debt to U.S. taxpayers.
Alico mostly does business overseas in 50 nations and is one of the largest life insurance companies in lucrative, emerging Asian markets. Industry analysts say $15 billion would be a large amount to pay for a company valued at about $4 billion in 2008, but Alico has a large share of lucrative emerging life insurance markets in China and other parts of Asia. If MetLife does purchase Alico from AIG, the Federal Reserve Bank of New York would get about $9 billion as partial reimbursement for the taxpayer-funded bailout of the nearly bankrupted insurer in 2008. AIG would retain the remaining $6 billion.
The $9 billion would be used to buy back preferred shares of AIG stock that the federal government received as collateral for rescuing the ailing insurer in 2008. AIG officials also would allocate $16 billion to the Federal Reserve Bank of New York from the proceeds from the expected initial public offering of AIG’s Asian-based life insurance unit, American International Assurance (AIA), on the Hong Kong stock exchange later this year.
Formerly the world’s largest insurance company, AIG became the world’s most indebted insurer after federal officials last year agreed to extend the company an $85 billion loan in exchange for an 80 percent share of company stocks. Federal officials said allowing AIG to go bankrupt would have a devastating impact on U.S. and international financial markets and later revised lending terms, making it a $153 billion loan with a lower interest rate and longer repayment period.
Under the new plan, the Federal Reserve provided AIG $60 billion in loans and the U.S. Treasury another $40 billion so company officials could buy up preferred stock. Federal officials also approved $53 billion to purchase the company’s risky mortgage-backed assets and other debt contracts.
MetLife, AIG Officials Mulling Terms for Asian Life Insurance Unit
Feb. 11, 2010 – Having reached a tentative selling price of about $15 billion to acquire Asian-based American Life Insurance Company (Alico) from the American International Group (AIG), MetLife officials reportedly are offering about $8 billion in company shares as partial compensation.
Several news reports indicate MetLife officials want to give AIG a combination of common and preferred shares of MetLife stock totaling about $8 billion with the rest paid in cash. MetLife has access to about $5 billion in financing from several large international banks, including the Bank of America, JPMorgan Chase, Credit Suisse and Deutsche Bank, Bloomberg News reported.
MetLife officials view AIG’s Alico subsidiary as a good way to gain a large share of the growing Asian life insurance market. But several credit ratings firms have warned a deal weakening MetLife’s financials would result in credit downgrades for the life insurer. MetLife officials contend they only would complete a transaction beneficial for the company and its shareholders.
“Because MetLife is financially strong and has a deep management team, we are in a very good position to pursue acquisitions that are strategic and would accelerate our long-term growth,” company chairman C. Robert Henrikson said last week. “If we reach an agreement, it will be because the transaction meets our criteria for acquisitions, including having the potential to generate long-term value for both shareholders and customers.”
Although headquartered in the United States, Alico primarily does its business overseas in 50 nations and is one of the largest life insurance companies in lucrative, emerging Asian markets. A deal likely will be finalized by the end of February, according to recent reports in the Wall Street Journal and New York Times.
AIG’s current top executive, Robert Benmosche, previously was the chief executive officer for MetLife. Benmosche has said he would not use his former position at MetLife to AIG’s advantage, but MetLife is one of the few companies with sufficient assets to obtain the capital necessary for such a large transaction. Industry analysts say $15 billion would be a large amount to pay for a company valued at about $4 billion in 2008, but Alico has a large share of lucrative emerging life insurance markets in China and other parts of Asia.
If MetLife does purchase Alico from AIG, the Federal Reserve Bank of New York would get about $9 billion as partial reimbursement for the taxpayer-funded bailout of the nearly bankrupted insurer in 2008. AIG would retain the remaining $6 billion.
The $9 billion would be used to buy back preferred shares of AIG stock that the federal government received as collateral for rescuing the ailing insurer in 2008. AIG officials also would allocate $16 billion to the Federal Reserve Bank of New York from the proceeds from the expected initial public offering of AIG’s Asian-based life insurance unit, American International Assurance (AIA), on the Hong Kong stock exchange later this year.
Fed Gets $9 Billion if MetLife Buys AIG Subsidiary
Jan. 21, 2010 – Reports of a pending sale of a lucrative, Asian-based life insurance unit to MetLife by the American International Group (AIG) could mean U.S. taxpayers will recoup up to $9 billion of their involuntary rescue of the nearly bankrupted insurance giant.
Several recent news reports claim AIG nearly has secured a deal to sell its Delaware-based Alico life insurance unit to MetLife for up to $15 billion. Although headquartered in the United States, the American Life Insurance Company (Alico) primarily does its business overseas in 50 nations and is one of the largest life insurance companies in lucrative, emerging Asian markets. A deal likely will be finalized by the end of February, according to recent reports in the Wall Street Journal and New York Times.
AIG’s current top executive, Robert Benmosche, previously was the chief executive officer for MetLife. Benmosche has said he would not use his former position at MetLife to AIG’s advantage, but MetLife is one of the few companies with sufficient assets to obtain the capital necessary for such a large transaction. Industry analysts say $15 billion would be a large amount to pay for a company valued at about $4 billion in 2008, but Alico has a large share of lucrative emerging life insurance markets in China and other parts of Asia.
If MetLife does purchase Alico from AIG, the Federal Reserve Bank of New York would get about $9 billion as partial reimbursement for the taxpayer-funded bailout of the nearly bankrupted insurer in 2008. AIG would retain the remaining $6 billion.
The $9 billion would be used to buy back preferred shares of AIG stock that the federal government received as collateral for rescuing the ailing insurer in 2008. AIG officials also would allocate $16 billion to the Federal Reserve Bank of New York from the proceeds from the expected initial public offering of AIG’s Asian-based life insurance unit, American International Assurance (AIA), on the Hong Kong stock exchange later this year.
Formerly the world’s largest insurance company, AIG became the world’s most indebted insurer after federal officials last year agreed to extend the company an $85 billion loan in exchange for an 80 percent share of company stocks. Federal officials said allowing AIG to go bankrupt would have a devastating impact on U.S. and international financial markets and later revised lending terms, making it a $153 billion loan with a lower interest rate and longer repayment period.
Under the new plan, the Federal Reserve provided AIG $60 billion in loans and the U.S. Treasury another $40 billion so company officials could buy up preferred stock. Federal officials also approved $53 billion to purchase the company’s risky mortgage-backed assets and other debt contracts.
AIG is attempting to sell off its overseas life insurance units and other subsidiaries to repay up to $60 billion in loans this year. Company officials intend to focus future business on property and casualty insurance markets and maintain a minority financial interest in some profitable overseas ventures.
Chinese Bank Buys AIG Hong Kong Unit for $70 Million
Nov. 4, 2009 – Officials for the Hong Kong-based China Construction Bank Asia yesterday announced the firm has completed acquiring ailing insurer American International Group’s Asia-based AIG Finance subsidiary for about $70 million. The firm was rechristened China Construction Bank Asia Finance.
The former American International Group (AIG) subsidiary has more than 500,000 credit card customers and about 5 percent of Hong Kong’s credit card market, according to the online publication China Knowledge. The acquisition means parent corporation China Construction Bank, the second largest bank in the world based on market value, can expand its global business strategy while AIG officials continue selling assets to repay its staggering debt to U.S. taxpayers.
Formerly the world’s largest insurance company, AIG became the world’s most indebted insurer after federal officials in September 2008 agreed to extend the company an $85 billion loan in exchange for an 80 percent share of company stocks. Federal officials said allowing AIG to go bankrupt would have a devastating impact on U.S. and international financial markets and later revised lending terms, making it a $153 billion loan with a lower interest rate and longer repayment period.
Under the new plan, the Federal Reserve provided AIG $60 billion in loans and the U.S. Treasury another $40 billion so company officials could buy up preferred stock. Federal officials also approved $53 billion to purchase the company’s risky mortgage-backed assets and other debt contracts.
AIG attempted to sell off its overseas life insurance units and other subsidiaries to repay up to $60 billion in loans this year, but a combination of tightened global credit markets, a shortage of qualified buyers and decreased market values during a global economic downturn have caused the firm to fall short of its lofty goal. Company officials intend to focus future business on property and casualty insurance markets and maintain a minority financial interest in some profitable overseas ventures.
AIG has raised more than $4 billion through the sale of several of its subsidiary units. Industry analysts say the insurer could raise up to $50 billion through the sales of AIG’s U.S.-based and overseas life insurance units and retirement savings units. But the firm will have to do so with a new chief executive in charge.
President Barack Obama’s “czar” in charge of executive pay at firms accepting taxpayer bailout funds recently gave his formal approval for a $10.5 million annual compensation package for newly appointed AIG Chief Executive Officer Robert Benmosche.
Kenneth Feinberg, Obama’s pay czar, approved a $7 million annual salary plus another $3.5 million in potential incentives for Benmosche, the former chief executive at MetLife who recently was appointed AIG’s new top executive. Feinberg said the compensation amount is “appropriate when compared to the total compensation packages of other applicable presidents and chief executive officers” in a letter addressed to AIG’s board of directors.
Benmosche replaces outgoing AIG chief executive and board director, Edward Liddy, who was appointed to the insurer’s top spot by federal officials after AIG accepted its initial bailout terms in 2008.