AIG to complete recapitalisation tomorrow

Global insurer American International Group (AIG) expects to complete several stages of its recapitalisation plan on 14 January. On completion of the plan, it will repay the US government bail-out it received during the financial crisis.

AIG said it has now satisfied the conditions to issue to shareholders 75 million warrants to buy AIG stock as part of the recapitalisation plan.

The warrants will be distributed on January 19, 2011, to AIG's common shareholders of record as of January 13, 2011. Each warrant entitles the holder to purchase one share of AIG common stock, with a par value of $2.50 per share, at $45 a share.

The issue of the warrants was approved by AIG’s board of directors on 6 January.

"With today's announcement, we anticipate that we will be able to deliver on our promise to the American people to repay the extraordinary assistance they provided to AIG during the financial crisis of 2008," said AIG president and chief executive Robert Benmosche in a statement. "We remain grateful for their support of AIG, and we remain convinced that the American people will realize a profit on their investment in our company.”

If the recapitalisation conditions are satisfied as expected on 14 January, AIG will repay and terminate the credit facility from Federal Reserve Bank of New York, facilitate the US government’s exit from two AIG special-purpose vehicles and retire its outstanding preferred shares.

AIG has taken a series of measures to boost capital and pay back the US government.

On 12 January, AIG announced that it had agreed to sell its Taiwanese life insurance subsidiary, Nan Shan, to a Taiwanese consortium for $2.6bn.

On 27 December AIG entered two, four-year bank credit facilities totalling $3bn. Its general insurance subsidiary, Chartis, also entered into a one-year, $1.3bn facility.

It has also sold $2bn in debt, established a $500m contingent liquidity facility and undertaken an initial public offering of its AIA subsidiary. In addition, it has sold life insurance subsidiaries ALICO, AIG Star and AIG Edison.