Insurance giant AIG granted lifeline
Manchester United’s embattled sponsor American International Group (AIG) was today granted a $20bn (€14bn) lifeline to shore-up its finances.
The world’s biggest insurer – which is the Premier League champions’ main sponsor – was told by New York governor David Paterson that it could borrow the money from AIG subsidiaries.
Rumours also swirled that AIG was in rescue talks with billionaire investor Warren Buffet.
News of the loan agreement came as AIG shares fell 45% on Wall Street, having fallen as much as 63% in early trading.
AIG is expected to make an imminent announcement about restructuring plans to save its battered balance sheet after suffering hefty losses from the credit crunch.
Reports earlier had suggested that the firm was asking the US Federal Reserve for $40bn (€28bn) in loans to stay in business.
The Manchester United sponsor signed a four-year £56.5m (€71m) agreement with the football club in 2006 – the biggest shirt sponsorship deal in English football.
Manchester United said today it was “in close contact” with AIG, but declined to comment further.
AIG has confirmed that it was reviewing its operations and looking at options with outside parties after shares have fallen dramatically over the past week amid concerns about its balance sheet.
The group had reportedly turned down private equity investment to retain control over its finances.
AIG needs cash to rebuild its balance sheet and is said to be looking at selling off assets to repay loans.
Chief executive, Robert Willumstad, who took the reins of the world’s largest insurer in June, could announce a turnaround plan today involving the potential disposal of assets, such as its aircraft-leasing business, according to reports.
The group employs around 3,000 staff in the UK out of some 116,000 globally.
AIG operates under three main brands in the UK – AIG UK, AIG Life and AIG Direct.
However, it also sells insurance through high street names such as Argos and Boots, while the firm underwrites product warrantees for John Lewis department stores.
AIG saw its former boss, British-born Martin Sullivan quit in June after a 36-year association with the insurer.
Mr Sullivan, who was raised in Dagenham, Essex and joined AIG as a 17-year-old clerk in the company’s London office, ended his three-year tenure at the helm after facing calls to quit from shareholders.
The group’s latest crisis comes as it is also threatened with a credit ratings downgrade from Standard & Poor’s – news which sent the group’s shares down 30% in US trading on Friday alone.
