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AIG wins new $40bn bail-out cash AIG wins new $40bn bail-out cash
(31 minutes later)
Insurance giant AIG is to gain $40bn (£25.3bn) from the US government's $700bn bail-out, putting total government aid for the firm at $150bn. Insurance giant AIG is to get fresh financial help from the US government, which will bring the total aid package for the firm to about $150bn (£94bn).
The government said the move was to keep the insurer "strong". An existing $85bn loan is also being restructured. The government will put $40bn into the firm by buying preference shares, which will give it an ownership stake in AIG.
The previous deal for $85bn was signed with the Federal Reserve Bank of New York on 16 September, with the aim of helping the firm stay afloat. The $40bn comes from the recently agreed $700bn bail-out package for the US financial system.
Under the new deal, the Federal Reserve will reduce the $85bn loan to $60bn. News of the aid came as AIG reported a $24.5bn third-quarter loss, down from a profit of $3.09bn a year ago.
It is the first time funds from the bail-out have been provided to something other than a bank. Maintaining strength
The near-collapse of AIG led to a period of huge financial turmoil. Under the new deal, the existing $85bn government rescue package for AIG signed on 16 September is also being restructured, which will cut the $85bn Federal Reserve loan to $60bn.
While other firms - namely Lehman Brothers - collapsed or were bought out, AIG was rescued. The $40bn in aid from the Troubled Asset Relief Program (Tarp) is the first time funds from the $700bn bail-out package have been provided to a company that is not a bank.
The government said the move was needed to "keep the company strong and facilitate its ability to complete its restructuring process successfully".
The near-collapse of AIG occured during a period of huge financial turmoil.
While firms such as Lehman Brothers collapsed or were bought out, AIG was rescued.