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AIG on track to repay government before 2013: CEO
American International Group Inc's (AIG.N) chief executive said on Thursday he is "pretty comfortable" the bailed-out insurer will be able to repay the government before the 2013 expiration of its credit line.
AIG, which has been selling assets to repay the U.S. government's $182.3 billion taxpayer-funded rescue, nearly collapsed in 2008 from a liquidity strain caused by the need to make billions of dollars in collateral payments to banks that bought credit default swap protection from its financial products unit.
Robert Benmosche told Reuters selling the AIG units AIA to Prudential Plc (PRU.L) and life insurance unit American Life Insurance Co (Alico) to MetLife Inc (MET.N) will bring the company to a point at which it can begin formal discussions with the government about an exit.
"We haven't locked in a date (for repayment)," he said, noting the insurer's priority is to complete these two asset sales.
"We think over the next 12 to 18 months we can see our way clear to working through some of our issues.
"The most important thing is to raise enough money so that we can pay back the Federal Reserve," he added in the telephone interview.
Earlier on Thursday, the U.S. government named Donald Layton, former chief executive of E*Trade Financial, and Ronald Rittenmeyer, former chief executive of Electronic Data Systems, to serve on AIG's board.
Benmosche compared the government's involvement in AIG to the relationship between any creditor and lender.
"We run the company, they just keep an eye on things and make sure everything's OK," he said.
PRUDENTIAL
The insurer agreed earlier this month to sell Alico for about $15.5 billion. The sale of AIA to Britain's Prudential for $35.5 billion is "going well," Benmosche said.
The New York Post reported on Wednesday that Prudential investors' were objecting to the AIA sale price.
"Our feedback from Prudential has been that, while there are some investors that are concerned and have raised issues, they're ready to proceed," Benmosche said, adding business at AIA has continued as usual since the sale announcement.
Separately, the CEO said he understands the outcry over compensation paid to AIG employees in 2009.
"The fact is, we have a lifeline from the government," he said.
The Fed credit line is due to be repaid by September 16, 2013, five years after it was granted.
Ratings agency Standard & Poor's earlier on Thursday affirmed its A-minus rating with a negative outlook. The ratings agency raised AIG's stand-alone credit profile -- its rating if it did not have government support -- to BB from BB-minus, noting the company has "made solid progress in its overall restructuring plan and in stabilizing its insurance operations."
AIG shares closed down 3 cents at $34.11. The shares have risen almost 14 percent since the start of the year.
[Source: By Elinor Conlay, Reuters, NY, 01Apr10]
 | This document has been published on 20May10 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. |