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AIG Posts Record Loss; Fed Steps in Again

NEW YORK CITY-The beleaguered insurance giant and the federal government announce actions to help stabilize AIG's finances as it posts a $62-billion quarterly loss.

By Paul Bubny | Updated on March 02, 2009

NEW YORK CITY-As it posted the largest quarterly loss ever recorded by a US corporation, AIG on Monday received another infusion of federal money via the Treasury Department’s plan to create a $30-billion, five-year equity capital facility for the beleaguered insurer. The company also announced it would create a holding company for several of its insurance businesses while continuing to work on selling off others.

The standby capital facility is one of a number of measures being implemented by AIG, Treasury and the Federal Reserve to help stabilize the company. In a joint statement, Treasury and the Fed on Monday announced a restructuring of the government’s aid to AIG. These actions mark the fourth time the government has stepped in to prop up the ailing insurer since the initial bailout last September.

Among other steps, Treasury will swap its $40 billion of cumulative perpetual preferred shares for new preferred shares with terms that more closely resemble common stock. The Fed has reduced the $60-billion revolving credit facility established for AIG last September in exchange for preferred interests in two special purpose vehicles created to hold all of the outstanding common stock of American Life Insurance Co. and American International Assurance Co., two life insurance holding company subsidiaries of AIG.

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