AIG closes two deals with New York Fed,lowers debt to USD17 bn

NEW YORK: Troubled insurer American International Group has closed a deal with the New York Federal Reserve (FRBNY) in a move to reduce its overall debt by more than half to USD 17 billion.

AIG, which had taken over USD 180 billion in government aid last year, said its outstanding principal balance owed to FRBNY has been reduced to USD 17 billion from about USD 42 billion.

In a statement AIG said it has closed two previously announced transactions with FRBNY that have reduced AIG's debt obligations to the Federal Reserve by USD 25 billion in exchange for FRBNY's acquisition of preferred equity interests in the American International Group's subsidiaries.

AIG's debt reduction follows the deal reportedly announced in March last year to give the New York Fed a preferred stake in two of AIG's life insurance companies, American Life Insurance Co (Alico) and American International Assurance (AIA).

"Today's announcement that we have reduced our debt to FRBNY by USD 25 billion sends a clear message to taxpayers: AIG continues to make good on its commitment to pay the American people back," AIG Chief Executive Officer Bob Benmosche said.