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Fed To Aid AIG Again, Get Stake In 2 Units

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The Associated Press

Published: March 3, 2009

WASHINGTON - The government on Monday unveiled a revamped rescue package to insurance giant American International Group and will provide the troubled company with an additional $30 billion in taxpayer money on an as-needed basis.

The new package comes as AIG has burned through cash and been unable to find buyers for pieces of its company that it hoped to sell to repay the government on its existing aid package, which totals some $150 billion.

The announcement came as AIG, once the world's largest insurer, reported Monday it lost $61.7 billion in the fourth quarter, the biggest quarterly loss in U.S. corporate history.

Under the new package, the Federal Reserve will take up to a $26 billion stake in two international units - Asia-based American International Assurance Co. and American Life Insurance Co., which operates in 50 countries. The Fed also will make $8.5 billion in new loans to benefit the domestic life insurance subsidiaries of AIG.

It marked the fourth time the government has stepped in to help AIG. Its initial lifeline came in September, when the government effectively seized control of the company, taking a nearly 80 percent ownership stake and replacing top management.

The fresh $30 billion will come from the government's $700 billion financial bailout pot.

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