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Daily Insurance Industry News
Monday 24th of September 2018
February 26, 2009

AIG struggles to repay bailout loan

by David Masters

Story link: AIG struggles to repay bailout loan

Troubled US insurer AIG may scrap plans to repay its $60 billion bailout loan from the federal government by selling business, after failing to find enough potential bidders.

Chief executive Edward Liddy, who conceived the plan to sell off units when he took charge in September 2008, has now conceded that his plan may not work, according to inside sources at AIG.

New proposals, including handing over some businesses to US government control, are now being considered.

This development comes as AIG prepares to report a $60 billion loss for the fourth quarter, leading to reports that it may require yet another government bailout.

Including its $60 billion government loan, AIG has already received $150 billion in bailout money from the US government.

Needless to say, AIG’s future remains uncertain.

“Nobody knows what the final deal will look like at this point, assuming there is one,” said Bob Hartwig, a New York based insurance analyst.

“What it sounds like is the Treasury and the Federal Reserve are struggling to craft a solution that will prevent additional problems from emanating from AIG and one that minimises the impact on taxpayers,” Hartwig added.

A spokesperson for AIG declined to give specific details about the company’s potential losses, but confirmed that the insurer is in discussions with the government about its future.

“We continue to work with the US government to evaluate potential new alternatives for addressing AIG’s financial challenges,” spokesperson Christina Pretto said.

“We will provide a complete update when we report financial results in the near future.”

 

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