American International Group Inc., recipient of a U.S. bailout, will pay $1.5 billion to the Treasury Department as the insurer winds down its obligations to the government.
“We plan to pay in full the Treasury’s remaining preferred interests,” Mark Herr, a spokesman for the insurer, said Monday in an e-mailed statement. The transaction will mark “another critical milestone in AIG’s repayment to the government and the taxpayers recouping their investment in AIG.”
The payment will eliminate the government’s preferred interests in a facility created in December 2009 to reduce AIG’s debt to the Federal Reserve Bank of New York. The interests were transferred to the Treasury last year.
AIG has sold more than $50 billion in assets to repay the 2008 rescue. Chief Executive Officer Robert Benmosche, 67, is focusing on global property-casualty and U.S. life-insurance operations as seeks to attract private investors to replace government funds.
The insurer said Monday that it would repay the Treasury’s interests after a bond sale, according to a regulatory filing. AIG, based in New York, is issuing $750 million in 3-year and $1.25 billion in 5-year debt that’s expected to settle on March 22, according to data compiled by Bloomberg.
AIG’s bailout was revised at least four times, swelling to $182.3 billion as the U.S. extended more credit and lowered the interest charged. The insurer repaid the balance on a Fed credit line last year and the Treasury converted its preferred stake into 92 percent of the company’s common stock. That holding has been cut to 70 percent in two share sales.
© Copyright 2014 Bloomberg News. All rights reserved.