AIG CEO Says Company on Strong Bailout Repayment Path
Robert Benmosche, CEO of American International Group Inc. (AIG) recently announced that the company would become less reliant on U.S. aid as it sell its units, borrows from debt markets and works hard to strengthen operations it intends to hold on to. On a strong path to repaying the $182.3 billion it received in rescue funds, Benmosche said that AIG will hold up its end of the bargain sooner than later.
Path to Repayment
The insurer’s plan is to first pay off the $25.3 billion it owes to the Federal Reserve. Then it will decide how to raise cash it needs to end its separate arrangement with the U.S. Treasury that includes a draw on a second credit line of more than $40 billion.
It has already made moves to raise capital but selling $50 billion worth of its life insurance business. It sold off American Life Insurance Company (ALICO) to MetLife and its Asian life insurance business to Prudential. These moves, according to Standard & Poor’s, have shown that the insurer may recover from the junk status assigned to its stand-alone credit at year-end.
Consumers Still Believe in AIG
Despite the ups and downs the AIG has seen since it faced bankruptcy in 2008, Benmosche says that about 75 percent of life insurance buyers are still interested in keeping their insurance with the company, as opposed to 41 percent six months earlier. This spells good news for the company.
The company hopes that with completing the sales of its life insurance units, it will continue to increase profits and, in turn, improve operations as a whole.
Now that AIG is recovering, do you feel comfortable with purchasing life insurance from the company?