AIG is set to repay nearly $4bn to Federal Reserve Bank of New York (FRBNY), which will reduce its outstanding principal balance to slightly more than $15bn, not including accumulated interest and fees.
AIG has received more than $4b from its aircraft leasing firm, International Lease Finance Corporation (ILFC), with the sale of bonds.
The payment of $3.95bn marks the single largest cash payment AIG has made to the credit facility and is the largest reduction in the credit facility’s principal balance.
The payment will reduce the size of the FRBNY credit line available to AIG from approximately $34bn to approximately $30bn, according to the AIG.
AIG President and CEO Robert Benmosche said that this is continuing tangible evidence of AIG’s progress in repaying the American taxpayers.
ILFC has demonstrated today further progress in stabilizing its finances and buttressing ILFC’s balance sheet. Closing on the ALICO transaction remains on track and we continue to work diligently on the initial public offering for AIA,” Benmosche said.
Our insurance businesses are profitable; client retention rates have stabilized; and surrender rates have improved to normal levels. We are starting to see light at the end of the tunnel.
With the repayment, AIG’s total principal and interest owed on the credit facility is approximately $21bn. AIG anticipates the repayment will trigger an accelerated amortization of the prepaid commitment fee asset, resulting in an approximately $650m pre-tax charge being taken by AIG.