American International Group Inc. (AIG) has moved closer to getting its AIA Aurora L.L.C. subsidiary out of hock the U.S. Treasury Department.
AIG, New York (NYSE:AIG), has paid the Treasury Department $2 billion of the $2.16 billion it took in by selling a subsidiary — Nan Shan Life Insurance Company Ltd., Taipei, Taiwan – to a holding company owned by Ruentex Industries Ltd., Taipei, and Pou Chen Corp., Taichung City, Taiwan, for $2.16 billion.
The Treasury Department and the Federal Reserve Bank of New York pumped about $180 billion in aid into AIG after the credit market freeze of 2007 left the company gasping for capital at a time when little private-market capital was available. AIG has paid off much of what it owes, and the Treasury Department and the New York Fed have restructured AIG’s obligations in such a way that the Treasury Department acquired some of the obligations from the New York Fed.
The Treasury Department has been holding about $13 billion in preferred equity interests in AIA Aurora, a subsidiary that controlled American International Assurance Company Ltd., a major AIG insurer that sold coverage outside the United States.
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AIG divested control of AIA Aurora through a public stock offering in September. AIG still owns a one-third stake in the subsidiary.
The $2 billion payment to the Treasury Department has reduced the department’s remaining liquidation preference of preferred interests in AIA Aurora to about $9.3 billion, AIG says.
“We continue to make progress in helping the Treasury and taxpayers recoup their investment in AIG,” AIG President Robert Benmosche says in a statement.