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AIG to repay £15bn to Fed by flotation of Alico and AIA

American International Group is to float its two life insurance units, Alico and AIA, on the Asian stock exchange in order to repay £15bn in debt owed to the Federal Bank of New York.

AIG said today that it will put American International Assurance Co and American Life Insurance Co up for initial public offerings, granting the Fed $25bn – or £15bn – worth of interests in the firms via special purpose vehicles in order to reduce its government debt.

Under the deal, AIG will put equity from both units into separate special purpose vehicles in exchange for preferred common interests in the vehicle.

The flotations are expected to take place in the second half of 2009.

AIG chairman and chief executive Edward Liddy says: “Placing AIA and Alico into special purpose vehicles represents a major step toward repaying taxpayers and preserving the value of AIA and Alico, two terrific life insurance businesses with great futures.”

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