NICO estimates that 80% of net losses and allocation expenses on the reserves concerned exceed the first $25 billion and that NICO`s total liability limit under the agreement is $20 billion. AIG stated that this provided policyholders with physical protection against negative developments that exceed the current level of reserve requirements. AIG files 8-K to reflect the entry into Amendment 3 of the credit contract between AIG and the New York Fed of September 22, 2008. These include the removal of the 3.5% libor minimum rate, the issuance of certain shares to the Treasury and other technical changes. AIG announces an agreement with the U.S. Treasury, the Federal Reserve Bank of New York and the trustees of AIG Credit Facility Trust for a recapitalization plan to expedite the repayment of its obligations to U.S. taxpayers. The plan accelerates the full repayment and termination of the New York Fed`s credit facility, simplifies current government investments and sets in motion the steps of the U.S. Treasury`s exit, including the conversion of its preferred shares into common shares. NEW YORK–(BUSINESS WIRE)-American International Group, Inc. (NYSE:AIG) announced today that it has entered into a binding account sheet with the National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc., for a negative reinsurance contract under development effective January 1, 2016. The agreement covers 80% of the majority of AIG`s long-term U.S. exposures for the 2015 and previous accident years, which cover the majority of AIG`s U.S.
exposures during this period. AIG retains sole responsibility for the processing and settlement of claims, and NICO has various access, association and consultation rights. American International Group Inc. announced that it has entered into a reinsurance contract covering many of the long-term risks associated with previously written commercial insurance policies. “This milestone allows us to focus resolutely on the future and build on the progress we have made in transforming AIG,” said Peter D. Hancock, President of AIG and Chief Executive Officer. “The agreement supports our stated strategy and gives us additional risk capacity to serve our clients and return capital to shareholders.” The Board of Governors authorizes the New York Fed and AIG to enter into a securities loan agreement to provide AIG with additional liquidity of $37.8 billion. On the closing date of the recapitalization, the New York Fed`s revolving credit facility was fully repaid, including interest and fees; The agreement and the loan commitment have been terminated; and all remaining preferred shares of the AIA and ALICO special vehicles are either cashed in by AIG or purchased and transferred to the U.S. Treasury.
From September 22, 2008 until the full repayment of its loans to AIG on January 14, 2011, the New York Fed acted under a credit agreement that contained important conditions and safeguards to ensure the full repayment of the loans, including interest and accrued expenses.