AIG agrees government bailout

The world’s largest insurer American International Group (AIG) has signed a definitive agreement for a US$85bn loan from the Federal Reserve Bank of New York after serious liquidity problems threatened to topple the insurer. The loan effectively makes the US government a majority shareholder in the insurer with a stake of approximately 79.9%. A trust will be established to hold the preferred stock, which will be convertible into common stock following a shareholders’ meeting.