AIG IS SUED OVER INTEREST-RATE SWAP

Troubled insurer AIG has been sued in US District Court in Manhattan by Brookfield Asset Management, the Toronto-based firm that is trying to have a 1990 interest-swap agreement declared null and void. AIG asserts that it is still owed $1.2bn under the swap agreement. In its lawsuit, Brookfield asserts that default provisions in the swap deal have been triggered by AIG's near collapse and rescue by the US government. Two interest-rate swaps, along with the sale of debentures, were part of the 1990 deal in which AIG loaned $200m to Brookfield. Brookfield repaid the $200m in debentures and now asserts that it has no further financial obligation to AIG. AIG spokesman Mark Herr said that Brookfield's "assertions are red herrings, which distract from the plain facts of the case: we had a contract, AIG performed as promised and Brookfield did not", adding that Brookfield was "trying to use the financial crisis as a pretext to evade its obligation to pay us what they owe us".