AIG borrows an additional US$37 billion

American International Group, Inc. (AIG)’s domestic life insurance subsidiaries have borrowed approximately US$37.2 billion from the Federal Reserve Bank of New York.
The New York Fed will borrow investment grade fixed income securities from these AIG subsidiaries in exchange for cash collateral, according to an AIG release.
Draw downs under the existing, US$85-billion New York Fed credit facility have been used in part to settle securities lending transactions.
“AIG understands the New York Fed is prepared to borrow securities to extend AIG’s currently outstanding lending obligations where those obligations are not rolled over or replaced by transactions with other private market participants,” the company noted.
“These borrowings by the New York Fed will allow AIG to replenish liquidity to the securities lending program on a as-needed basis, while providing possession and control of these third-party securities to the New York Fed.”
This comes just weeks after the company received its US$85-billion loan from the Fed.
Last week, AIG disclosed it had drawn down US$61-billion of the Fed loan.
Meanwhile, The Hartford Courant reported on Oct. 9 that AIG has hired an investment bank KBW Inc. to find buyers for its subsidiary The Hartford Steam Boiler and Inspection Co. (North America’s largest equipment-breakdown insurers).
The reported impending sale of HBS, which AIG has not confirmed publicly, “signals that CEO Edward Liddy may be planning on dismantling a greater share of AIG than he has outlined,” the Courant reported.