AIG Bailed Out By US Government Loan

Wed, 17 Sep 2008

AIG, the world’s largest insurance company, has been granted a £47.2 billion rescue package from the US Government to save it from going under.

The US Federal Reserve said it agreed to provide an emergency loan as a "disorderly failure" of AIG could undermine the country’s already fragile financial markets. The US government will receive a 79.9 per cent equity stake in return.

The insurance firm, which sponsors Premier League champions Manchester United, was initially granted an £11.2 billion lifeline to shore up its finances on Monday night following reports of a near- collapse, caused by the plunging US housing market.

However, AIG was then downgraded by three major ratings agencies, making it more expensive for the firm to raise funds .

The company, which made a net loss of £7.4 billion in the first half of 2008, saw its shares fall by more than 30 per cent in early Wall Street trading.

AIG operates in 130 countries and jurisdictions across the globe, including the US, UK, Brazil, China, India and Taiwan, and employs more than 116,000 members of staff.
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