AIG secures US$3billion of financing

Insurance giant American International Group Inc (AIG) is taking yet another step on its road to recovery, obtaining US$3 billion in credit facilities.

The New-York based company said it will be able to tap the facilities once it finishes paying back its bailouts.

AIG received the biggest government rescue of any financial company during the recent crisis. Its lifelines from the US Federal Reserve and US Treasury were worth US$182 billion.

The US$3 billion in credit facilities will be split evenly between a 364-day agreement and a three-year agreement.

AIG also said that Chartis has entered a one-year, US$1.3 billion letter of credit facility.

There are 36 banks participating in the facilities.

The agreement builds momentum for AIG, which earlier this month raised US$2 billion selling senior unsecured notes and established a US$500 million contingent liquidity facility.

AIG in September announced a recapitalisation plan under which it would be able to repay the American taxpayer for the bailouts. The deal gave Treasury a 92.1 per cent stake in AIG before it could begin selling its shares.

But AIG needed to prove its strength by displaying its ability to raise money from private investors.

"This success is another important vote of confidence by the market in AIG," CEO Robert Benmosche said in a statement Monday.

"As we approach year's end, we believe we are close enough to completing our recapitalisation plan that we can see the finish line," he added.

AIG became a symbol for excess risk on Wall Street during the crisis that peaked in late 2008.

The company sold insurance-like protection against losses on mortgage bonds and other risky investments.

When the value of those investments dropped, AIG could not afford to cover the losses.

AIG shares closed up US$5.05 at US$59.38 on Monday.

- AP