SAN FRANCISCO — American International Group said Monday that it has repaid almost $4 billion to the U.S. government as the company's aircraft-leasing business was able to finance itself in the debt market.
AIG said it got $3.95 billion from International Lease Finance Corp. The insurer used that money to pay off some of its revolving credit facility with the Federal Reserve Bank of New York.
The payment will reduce what AIG owes to the New York Fed to just over $15 billion, not including accumulated interest and fees. The total principal and interest owed on the credit facility is about $21 billion.
It's the largest single cash payment the insurer has made on the facility, AIG added. The payment also reduces the size of the New York Fed credit line available to AIG from about $34 billion to roughly $30 billion.
"This is continuing tangible evidence of AIG's progress in repaying the American taxpayers," AIG chief executive Robert Benmosche said. "AIG is getting stronger every day. We still have more work to do, but we will finish the job and make sure we repay the American taxpayers."
AIG was bailed out in 2008 with more than $100 billion of U.S. government support. The insurer used some of that money to lend to ILFC, which lost access to the debt market during the financial crisis.
ILFC has been selling assets to reduce leverage. Meanwhile, the corporate-bond market is on a tear as near-zero interest rates set by the Federal Reserve trigger a new search for yield among fixed-income investors.
On Monday, ILFC said it completed the sale of $4.4 billion in debt.
"The market has once again given ILFC a vote of confidence," Benmosche said. "This capital raise, combined with the capital raises earlier this year, demonstrates that ILFC is getting stronger with each passing day."
ILFC said Monday that it has generated almost $13 billion in liquidity in the past five months. That includes the recent $4.4 billion of debt sales, other debt issuance, aircraft sales and extensions of maturities on some debt, the unit noted.
"These note offerings, which were increased from $2.5 to $4.4 billion, are a direct reflection of our company's viability and future prospects as a leader in leasing aircraft to the world's airlines," ILFC's CEO, Henri Courpron, said in a statement.
Benmosche also cited progress stabilizing the rest of AIG.
The sale of Alico to MetLife remains on track, and AIG continues to "work diligently" on the AIA initial public offering, Benmosche said.
"Our insurance businesses are profitable; client retention rates have stabilized; and surrender rates have improved to normal levels," he added.
The $3.95 billion repayment to the New York Fed will trigger a pretax charge of roughly $650 million, AIG said. This represents an accelerated amortization of commitment fees that AIG prepaid to the New York Fed.