Facing a roughly $60 billion fourth quarter loss—the biggest in corporate history—American International Group is cutting a deal with the feds to stay alive, Reuters reports. If AIG's board approves the agreement tomorrow, Washington will give the insurer another $30 billion in equity and a lower interest rate on its current $60 billion credit line.
Other details include:
- Removing the interest rate floor on AIG's government loan—3% above Libor—to save the company about $1 billion per year.
- Mandating that AIG pay back the Federal Reserve with ownership interests in American Life Insurance and American International Assurance.
- Opening the door for AIG to pay off more debt with securitized life insurance policies.
The proposal comes as AIG tries to sell assets and plans to announce its massive quarterly loss on Monday.