AIG makes $25bn from disposals

Insurance giant American International Group yesterday cut its debt to the US taxpayer by $25bn (£15bn) by selling stakes in two of its subsidiaries to the Federal Reserve Bank of New York.

AIG said that under the debt-for-equity swap the NY Fed would receive preferred shares with a liquidation preference worth $16bn in American Life Insurance and $9bn in American International Assurance which would be placed in special purpose vehicles. The deal reduces AIG’s exposure to the New York Fed to $17bn.