Page last updated at 12:34 GMT, Monday, 10 November 2008

AIG wins new $40bn bail-out cash

AIG sign
The initial $85bn loan from the US Fed was a lifeline for the firm

Insurance giant AIG is to get fresh financial help from the US government, which will bring the total aid package for the firm to about $150bn (94bn).

The government will put $40bn into the firm by buying preference shares, which will give it an ownership stake in AIG.

The $40bn comes from the recently agreed $700bn bail-out package for the US financial system.

News of the aid came as AIG reported a $24.5bn third-quarter loss, down from a profit of $3.09bn a year ago.

Maintaining strength

Under the new deal, the existing $85bn government rescue package for AIG signed on 16 September is also being restructured, which will cut the $85bn Federal Reserve loan to $60bn.

The $40bn in aid from the Troubled Asset Relief Program (Tarp) is the first time funds from the $700bn bail-out package have been provided to a company that is not a bank.

The government said the move was needed to "keep the company strong and facilitate its ability to complete its restructuring process successfully".

The near-collapse of AIG occured during a period of huge financial turmoil.

While firms such as Lehman Brothers collapsed or were bought out, AIG was rescued.



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