AIG sells mortgage securities to Fed-backed vehicle
American International Group Inc. today announced the sale of its residential mortgage-backed securities, with a face value of $39.3 billion. to a government-owned limited liability company.
American International Group Inc. today announced the sale of its residential mortgage-backed securities, with a face value of $39.3 billion. to a government-owned limited liability company.
Maiden Lane II LLC, the entity buying the mortgages, is controlled by the New York Federal Reserve Bank.
In exchange, New York-based AIG’s life insurance companies received $19.8 billion, plus the right to get deferred contingent portions of the full purchase price, according to a filing with the Securities and Exchange Commission.
The New York Fed loaned Maiden Lane $19.5 billion with the goal of helping AIG shed its mortgages through the purchase.
Once that loan has been repaid in full, any net cash proceeds from the RMBS will go toward AIG’s life insurance companies, which include American General Life Co. of Houston; AIG SunAmerica Life Assurance Co. in Los Angeles; Houston-based AIG Annuity Insurance Co., American Life Insurance Co., of Wilmington, Del.; and The Variable Annuity Life Insurance Co. in Houston, among others.
The New York Fed, which will have sole control over the RMBS sales, is entitled to five-sixths of any net proceeds received by Maiden Lane, and the remainder will go to AIG’s life insurance companies.
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