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AIG To Take Loan From Subsidiaries

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The Tampa Tribune

Published: September 16, 2008

CHARLOTTE, N.C. - American International Group Inc. will be allowed to use $20 billion of assets held by its subsidiaries to provide cash needed for the troubled insurer to stay in business, New York Gov. David Paterson said Monday.

The move comes as AIG reviews its operations and discusses alternatives with outside parties, reportedly including Warren Buffett's Berkshire Hathaway Inc., to shore up its business amid concern the world's largest insurer could need billions of dollars to strengthen its balance sheet.

Paterson asked New York state insurance regulators to allow New York-based AIG to provide a bridge loan to itself. He also asked the head of New York's insurance department to talk with federal regulators about providing an additional loan to AIG.

The move will allow AIG to use those assets as collateral to borrow cash to fund its day-to-day operations, Paterson said.

It also helps AIG by "giving them what they need most, which is time," said Keefe Bruyette & Woods analyst Cliff Gallant, who added that the relaxation of insurance regulations is "unprecedented."

The Associated Press

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