AIG unveils plan to repay US taxpayers, exit govt control

NEW YORK: Battered American International Group today outlined plans to repay the funds received from American taxpayers that helped the once-famed insurer to stay afloat during the global financial turmoil.

The insurer, in which the US government currently holds nearly 80 per cent stake, received more than USD 180 billion from American taxpayers.

As per the latest plan, AIG would pay back USD 20 billion worth senior secured debt as well as give 1.655 billion common shares to the Treasury Department in return for USD 49.1 billion-preferred stocks.

In addition, AIG would issue up to 75 million warrants having a strike price of USD 45 per share to existing common shareholders.

"Upon the exchange, the US Treasury will own 92.1 per cent of the common stock of AIG," the company said in a statement.

According to the firm, it expects to repay and terminate existing Federal credit facilities as well as issue common shares to the Treasury before the end of 2011 first quarter.

In recent months, the American insurer has been exploring ways to come out of government control. The entity is pursuing various disinvestment opportunities apart from listing options for some of its subsidiaries.

Earlier in the day, AIG said it would sell Japanese life insurance operations to US-based Prudential Financial in a deal worth USD 4.8 billion. The insurer would receive USD 4.2 billion in cash from the transaction.

In August, the firm announced its intentions for an initial public offering of its Asian life insurance business AIA, by way of listing on the Hong Kong Stock Exchange.