Treasury Receives $972M TARP Repayment from AIG

November 2, 2011

The U.S. Treasury Department said it received an additional repayment of $972 million from American International Group (AIG).

The payment came mostly from the scheduled release of the escrow from AIG’s sale of its American Life Insurance to MetLife last year.

The proceeds are used to pay back the government investment in AIG by redeeming an equal portion of Treasury’s preferred equity interests in AIA Aurora, a special purpose vehicle (SPV) that was created to assist AIG. Treasury announced the latest AIG repayment on Tuesday, Nov. 1.

The remaining liquidation preference Treasury holds in the AIA Aurora is now reduced to $8.4 billion.

At the height of U.S. financial crisis, the U.S. government’s support for AIG totaled $182.3 billion.

Remaining Gov’t Investments/Loans Down to $67.5B

After this latest repayment, the U.S. government’s remaining outstanding investment in AIG through Treasury (including common and preferred interests) stands at $50 billion.

Additionally, the Federal Reserve Bank of New York has loans to special purpose vehicles (SPVs) to assist AIG that amount to $17.5 billion, including principal and accrued interest outstanding. These Federal Reserve Bank of New York loans are collateralized by assets with a current value of $30.7 billion.

In January 2011, AIG completed a recapitalization deal, resulting in AIG repaying all outstanding loans provided by the Federal Reserve Bank of New York. Also at that time, Treasury received 1.655 billion shares of AIG common stock (92 percent of AIG’s outstanding common stock) and $20.3 billion in preferred equity interests in AIG.

Since then, Treasury sold 200 million shares of AIG for $5.8 billion and AIG made payments to Treasury, including the repayment announced this week, of $12.4 billion on the preferred equity interests.

“We continue to make steady progress toward our goal of America’s taxpayers recouping their entire investment in AIG,” said AIG President and CEO Robert Benmosche. “I am confident that AIG’s employees will continue to work hard so we can achieve this goal.”

AIG said the money paid this week is the sixth major payment to the government in 2011 and brings the total repaid in 2011 to $45 billion.

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