H41: Closing of the American International Group, Inc. (AIG) recapitalization plan

For release at 4:30 P.M. Eastern Time January 20, 2011

The Board's H.4.1 statistical release, "Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks," reflects the closing of the American International Group, Inc. (AIG) recapitalization plan, which occurred on January 14, 2011. The recapitalization plan was designed to restructure and facilitate repayment of the financial support provided to AIG by the U.S. Department of the Treasury (Treasury) and the Federal Reserve. Upon closing of the recapitalization plan, the cash proceeds from certain asset dispositions, specifically the initial public offering of AIA Group Limited (AIA) and the sale of American Life Insurance Company (ALICO), were used first to repay in full the credit extended to AIG by the FRBNY under the revolving credit facility (AIG loan), including accrued interest and fees, and then to redeem a portion of the FRBNY's preferred interests in ALICO Holdings LLC taken earlier by the FRBNY in satisfaction of a portion of the AIG loan. The remaining FRBNY preferred interests in ALICO Holdings LLC and AIA Aurora LLC, valued at approximately $20 billion, were purchased by AIG through a draw on the Treasury's Series F preferred stock commitment and then transferred by AIG to the Treasury as consideration for the draw on the available Series F funds. The weekly average values shown in table 1 reflect, as of January 14, 2011, the repayment by AIG of the "Credit extended to American International Group, Inc., net" and the "Preferred interests in AIA Aurora LLC and ALICO Holdings LLC," and the distribution of the "Funds from American International Group, Inc. asset dispositions, held as agent." The H.4.1 statistical release continues to show average amounts for "Credit extended to American International Group, Inc., net," "Preferred interests in AIA Aurora LLC and ALICO Holdings LLC," and "Funds from American International Group, Inc. asset dispositions, held as agent," even though all funding commitments to AIG have been terminated, to provide a complete disaggregation of changes in assets and liabilities from the corresponding week one year ago.