AIG may join bailout suit against U.S. government

NEW YORK, Tue Jan 8, 2013 — American International Group Inc., the insurer rescued by the U.S. government in 2008 with a bailout that ultimately totaled $182 billion, may join a lawsuit against the government alleging the terms of the deal were unfair.

The company confirmed a New York Times report that said AIG’s board would meet Wednesday to discuss joining a lawsuit filed against the government by the insurer’s former chief executive, Hank Greenberg.

The move would be something of a shock development given that AIG just launched a high-profile TV ad campaign called “Thank you America,” in which it offers gratitude for the rescue, which was fully repaid with a profit last year.

At the same time, Chief Executive Bob Benmosche has complained publicly that the company and its management have not gotten enough credit for avoiding a collapse, turning the business around and returning to profitability.

Greenberg, whose Starr International owned 12 percent of AIG before its near-collapse, has accused the Federal Reserve Bank of New York of using the rescue to bail out Wall Street banks at the expense of shareholders, and of being a “loan shark” by charging exorbitant interest on the initial loan.

A federal judge in Manhattan dismissed Greenberg’s suit against the New York Fed in November; a separate suit under different legal theories in the U.S. Court of Federal Claims is still pending.

An AIG spokesman declined to comment beyond confirming that the board would meet.

Chinese group to buy AIG’s plane leasing firm for up to $4.8 billion

NEW YORK/HONG KONG, Mon Dec 10, 2012 — American International Group Inc. is to sell nearly all of ILFC, the world’s second-largest airplane leasing business, to a Chinese consortium for up to $4.8 billion, giving the fastest growing aviation market easier and cheaper access to planes.

Chinese firms have shown interest in aircraft leasing before, and the deal would give China access to a global network of about 200 airlines in 80 countries. China is already ILFC’s largest market with 180 planes operating there, giving it 35 percent market share.

“It’s the biggest deal we have in the aircraft leasing world and it’s very ambitious,” said Paul Sheridan, head of Asia at aviation consultancy firm Ascend Advisor. “We believe there are not enough aircraft on order in China at the moment. It will help Chinese airlines get more aircraft.”

The world’s two largest planemakers – Airbus, owned by aerospace group EADS, and U.S. rival Boeing — have predicted demand for $4.5 trillion worth of passenger jets over the next two decades, with about two-thirds of new planes sold in the Asia-Pacific region, and China as the biggest single market in value terms.

New York Fed wins end of Greenberg’s AIG bailout lawsuit

NEW YORK, Mon Nov 19, 2012 – The Federal Reserve Bank of New York won the dismissal of former American International Group In. CEO Executive Maurice “Hank” Greenberg’s $25 billion lawsuit accusing it of acting unlawfully in bailing out the insurer during the 2008 financial crisis.

U.S. District Judge Paul Engelmayer in Manhattan on Monday dismissed in full the case brought on behalf of Greenberg’s company Starr International Co, which once held a 12 percent stake in AIG.

Greenberg had accused the New York Fed of wasting more than$60 billion of AIG and taxpayer funds in a “backdoor bailout” that let favored trading partners such as Goldman Sachs Group Inc. be repaid in full and freed from legal liability.

He also said the bank circumvented the law by letting the U.S. Treasury take a nearly 80 percent stake in the New York-based insurer without giving existing shareholders a vote.

But the judge found that AIG agreed to the bailout in a moment of “corporate desperation” and rejected what he called Greenberg’s likening of the New York Fed to a “loan shark” that forced AIG into an unfair bargain.

“Merely because the AIG Board felt it had ‘no choice’ but to accept bitter terms from its sole available rescuer does not mean that that rescuer actually controlled the company,” Engelmayer wrote.

A spokeswoman for David Boies, who is a lawyer for Greenberg, had no immediate comment. A spokesman for the New York Fed did not immediately respond to requests for comment.

Court allows Greenberg suit to proceed over AIG bailout

NEW YORK, Tue Sep 18, 2012 – A U.S. judge has ruled that former American International Group Inc. CEO Hank Greenberg can pursue a case involving the insurer’s bailout, citing questions about the Federal Reserve Bank of New York’s authority to take equity in the company in exchange for a loan.

The U.S. Court of Federal Claims late Monday denied a government motion to reconsider a July ruling allowing Greenberg’s Starr International Co to pursue its case. The Court of Federal Claims case is separate from another Greenberg lawsuit pending in New York.

Starr once held a 12 percent stake in AIG. At one time the world’s largest insurer by market value, the company received a bailout on September 16, 2008, as losses were skyrocketing from risky bets on mortgage debt through credit default swaps.

In Monday’s ruling, Judge Thomas Wheeler said Greenberg could pursue his claim for illegal exaction, in part because there are questions about whether the New York Fed was allowed to purchase AIG preferred shares in exchange for the rescue.

Treasury launches $18 billion AIG stock offering

NEW YORK, Mon Sep 10, 2012 – The U.S. Treasury Department said it will sell most of its stake in insurer American International Group Inc., making the government a minority investor for the first time since it rescued the company in the depths of the financial crisis four years ago.

While the Treasury was universally expected to sell stock this month, the magnitude of the planned $18 billion offering was a surprise that will take the government stake in what had been the world’s largest insurer to around 20 percent from 53 percent currently.

The sale announced on Sunday will trigger a number of changes for AIG, the most important of which is that it will now fall under Federal Reserve regulation as a savings and loan holding company since the company owns a small bank. The Treasury will also lose the ability to dictate the terms of further stock sales.

AIG said it would buy up to $5 billion of the offering. Last week the company sold part of its stake in the Asian insurer AIA to help fund that buyback.

A number of analysts who follow AIG said at the time they were disappointed the company was not buying back more shares, although they also assumed the eventual government offering would be much smaller than it has turned out to be.

Barclays Capital, in a research note Friday, said investors were likely to be disappointed if the government was not out of the stock by the November election.

AIG not on the hook for policyholders’ Madoff claims: U.S. court

NEW YORK, Wed Aug 15, 2012 – American International Group Inc. does not have to cover insurance claims from two former Bernard Madoff clients who sought compensation for their losses under their homeowner’s policy, a federal appeals court ruled on Wednesday.

The 2nd U.S. Circuit Court of Appeals rejected an appeal from Robert and Harlene Horowitz, who had sought up to $30,000 in coverage under a fraud safeguard provision in their homeowner’s policy with AIG. The two California residents had sought to make their lawsuit a class action on behalf of other AIG policyholders.

The Horowitzes said they lost $8.5 million from their Madoff account when the money manager’s Ponzi scheme was uncovered in 2008, reflecting the amount on their final account statement. But AIG denied they suffered any direct loss under the terms of their insurance policy.

The Horowitzes had deposited $4.3 million in their Madoff account over nearly 10 years and withdrawn about $4.5 million over the same period, leaving them with $226,000 more than they invested, according to Wednesday’s ruling. The $8.5 million claim was the indirect loss of potential returns on their initial investment, a scenario that was explicitly excluded from coverage under their policy, AIG argued.

In September 2010, U.S. District Judge Paul Crotty in Manhattan agreed with AIG and dismissed the lawsuit. The plaintiffs appealed to the 2nd Circuit, which backed Crotty’s ruling.

“The policy expressly excludes coverage for indirect losses — a term that includes the inability to realize income from the money, securities or other property that would have been realized but for the fraud,” the appeals court wrote.

AIG could not immediately be reached for comment. A lawyer for the plaintiffs was also not immediately available.

Madoff is serving a 150-year prison sentence after admitting to running what prosecutors called a $65 billion Ponzi scheme.

AIG to sell AIA shares after lock-up ends in September

NEW YORK, Wed May 16, 2012 – Bailed-out insurer American International Group Inc will sell its shares in Asian insurer AIA Group Ltd. after a lock-up period expires in early September, CEO Bob Benmosche said on Wednesday.

Benmosche said the shares “will be liquidated after September 4,” according to a transcript of AIG’s annual shareholder meeting on its website. He said the sale would help decrease volatility in AIG’s earnings.

AIG spun off two-thirds of AIA in 2010 as part of a package of asset sales to repay its $182 billion U.S. government rescue. Fluctuations in AIA’s share price have caused large swings in AIG’s earnings since then, with quarterly gains or losses of more than $1 billion commonplace.

AIG sold part of the stake in March, raising around $6 billion and leaving it with 18.6 percent of AIA, one of Asia’s three largest insurers.

Since that sale, which included the lock-up provision, AIA shares have fallen 2.8 percent. At current levels the remainin

U.S. could make $15.1 billion on AIG bailout: GAO

WASHINGTON, Tue May 8, 2012 – Taxpayers could realize a profit of more than $15.1 billion from the massive government bailout of insurer American International Group, a congressional watchdog said.

According to a report by the Government Accountability Office issued on Monday, the total return depends on the overall health of AIG and a number of other factors relating to Treasury’s ownership stake.

The U.S. Treasury acquired shares in AIG as part of a $182 billion bailout of the insurer in 2008, the largest rescue of a single corporation, and has reduced the investment over time.

Treasury sold AIG common stock in May 2011 and this March. Another sale on Monday – that realized $5.8 billion – reduced taxpayer equity interest in AIG to 61 percent.

The AIG portfolio includes a Federal Reserve Bank of New York loan to Maiden Lane III of about $8 billion, which the GAO analysis expects to be repaid in full and net additional returns.

“When all the assistance is considered, the amount the federal government ultimately takes in could exceed the total support extended to AIG by more than $15.1 billion,” GAO found.

Banks eye AIG’s $47 billion in toxic assets held by NY Fed: WSJ

NEW YORK, Fri Mar 16, 2012 – Several banks including Goldman Sachs have shown an interest in buying American International Group Inc’s. complex and troubled assets tied to the insurer’s bailout, the Wall Street Journal said, citing people familiar with the matter.

The troubled assets, which are held by the Federal Reserve Bank of New York, are valued at about $47 billion at face value, the paper said. These toxic assets were acquired by New York Fed as a part of the AIG bailout at the height of the financial crisis.

Banks including Barclays PLC’s Barclays Capital unit, Credit Suisse Group AG and Goldman Sachs are among the ones interested in buying the complex mortgage-backed assets at around their current market value, the Journal said, quoting people familiar with the matter.

A few interested buyers have approached the New York Fed about the collateralized debt obligations. However, the people told the paper that they do not yet expect any imminent sales.

None of the parties were immediately available for comment when contacted by Reuters.

AIG sells $500 million Blackstone stake: source

NEW YORK – Fri Mar 2, 2012: Bailed-out insurer American International Group Inc sold its entire $500 million stake in private equity firm Blackstone Group LP on Friday, according to a source familiar with the situation.

AIG, which is majority owned by the U.S. government after it was bailed out during the financial crisis of 2008, had acquired the stake before Blackstone went public in 2007, the source said.

The sale is part of AIG’s ongoing effort to monetize non-core assets, reduce risk and deleverage, another source said.

AIG and Blackstone declined to comment.

Blackstone’s shares fell 1.9 percent to $15.43 during morning trading on the New York Stock Exchange, while AIG’s shares fell 0.1 percent to $29.42.

CNBC earlier reported the stake sale.