US govt to 'bail out AIG again'

Struggling insurers American International Group Inc will receive up to $30bn (€23.8bn) in additional federal assistance in the fourth government rescue of the company, according to sources.

The new infusion is intended to prop up AIG – once the world’s largest insurer - as it is expected to announce $60bn (€47.6bn) in quarterly losses early today.

The company, which is considered too large to be allowed to fail, previously received about $150bn (€119bn) in loans from the government, which currently holds an 80% stake in the company.

Under the new deal, the US Treasury and the Federal Reserve would provide about $30bn (€23.8bn) in fresh capital to AIG from the government’s Troubled Assets Relief Programme, or TARP. The money would be provided as a standby line of equity that AIG could tap as its losses mount.

AIG has already received $40bn (€31.7bn) from TARP.

The new plan also calls for the Federal Reserve to take stakes in two international units, the source said.

Instead of paying back $38bn (€30.1bn) in cash with interest that it has used from a Federal Reserve credit line, AIG now will repay that amount with equity stakes in Asia-based American International Assurance Co and American Life Insurance Co, which operates in 50 countries.

The $20bn (€15.8bn) to $25bn (€19.8bn) remaining on the Federal Reserve credit line will be available for borrowing, the source said.