AIG has tapped most of U.S. bailout credit line
American International Group Inc. has used $90.3 billion of a U.S. government credit line since it was bailed out last month, an amount that exceeds the size of the original loan meant to save the insurer.
AIG may need more than the $122.8 billion now available to the New York-based insurer, Chief Executive Edward Liddy said. The firm, which agreed on Sept. 16 to turn over majority control to the U.S. in exchange for an $85-billion loan, received access to an additional $37.8 billion this month.
AIG’s latest balance was revealed Thursday by the New York Federal Reserve, and is up from $82.9 billion a week ago.
“This emphasizes the uncertainty for anyone trying to put a number” on AIG’s cash needs, said Bill Bergman, an analyst at Morningstar Inc. in Chicago. The financial-products unit that caused most of the firm’s losses “is a big black hole.”
Liddy, the former Allstate Corp. CEO appointed by the government to run AIG last month, is selling businesses including U.S. life insurance, airplane leasing and consumer finance to repay the loan.
AIG, which averted collapse last month with the Fed loan, is dependent on “what happens to the capital markets,” Liddy said Wednesday on PBS’ “The NewsHour With Jim Lehrer.”
The firm needed cash after credit downgrades forced it to post more than $10 billion in collateral to clients who purchased guarantees on bonds that lost value.
