AIG 'nears new bailout deal'

Fairfax Media

MORE WOES: American International Group is in talks with the US government for further help as the troubled insurer expects to post a US$60 billion fourth-quarter loss, a source familiar with the matter said.

Relevant offers

International

Telstra says CEO Trujillo leaving Windows 7 to be tailored for netbooks Branson expands empire as Virgin cuts jobs Asean leaders coordinating on financial crisis AIG 'nears new bailout deal' Visa transactions rise despite crisis Fairfax says considering capital management Obama urges quick action on Wall St reform Obama: US will emerge stronger from crisis Goodman Fielder H1 profit down

Embattled insurance giant American International Group is close to a deal with the US government that would ease the terms of its bailout, give a further equity commitment and help it pay down debt, a person familiar with the matter says.

The board of the insurer is due to meet on Sunday (today, NZT) to vote on the deal, which could be announced when AIG reports its quarterly results this week.

The revised agreement is expected to include an additional US$30 billion equity commitment from the government, more lenient terms on an existing preferred investment, and a lower interest rate on an existing US$60 billion government credit line, the source said.

AIG will also give the Federal Reserve ownership interests in its Asia-based American Life Insurance (Alico) and American International Assurance Co (AIA) units, the source said.

AIG, once the world's largest insurer, is also expected to post a roughly US$60 billion quarterly loss, hurt in large part by writedowns on certain tax assets and commercial mortgage backed securities, the source said.

AIG declined to comment.

- Reuters