Bailed-out insurance giant AIG repaid $6.9 billion of a US government bailout Tuesday, using proceeds from the sale of its stake in industry rival MetLife, the US Treasury said.
A Treasury statement said that American International Group used $6.6 billion of the $9.6 billion it received from the March 2 Metlife sale to make the repayment to the Troubled Asset Relief Program (TARP). The Treasury said that it also received from AIG $300 million the company had retained from an earlier transaction involving Metlife.
The repayment “will be used to reduce an equal portion of Treasury’s remaining preferred equity interests in AIG, which, after today’s repayment, stand at $11.3 billion,” the department said.
Once the world’s largest insurer, AIG received more than $180 billion from US taxpayers to help cover investments that collapsed amid the 2008-2009 financial crisis.
The Treasury made a total cash investment in AIG of approximately $68 billion through TARP, while the Federal Reserve provided loans to keep the key financial firm afloat.
AIG obtained the Metlife stake last year when its sold its American Life Insurance Company (ALICO) to MetLife for $16.2 billion, including about $7.2 billion in cash.
The remaining $3 billion of proceeds from the MetLife stake sale were placed in escrow and may be used later to repay the Treasury. “Based on current market prices, Treasury estimates that taxpayers will ultimately recover every dollar that the US government invested in AIG,” the Treasury said Tuesday.
With AIG’s $6.9 billion repayment Tuesday, taxpayers have now recovered $287 billion, or 70 percent, of the total TARP financial aid, Treasury said.
“We’re optimistic that as we continue to wind down TARP, our temporary investments in private companies will ultimately result in little or no cost to taxpayers taken as a whole,” Tim Massad, acting assistant secretary for financial stability, said in the statement.
Washington, March 8, 2011 (AFP)
