AIG separation moves closer

American International Group (AIG) has entered into an agreement with the Federal Reserve to positioning the American International Assurance (AIA) for an initial public offering, depending on market conditions.

 AIA is the Hong Kong-based company which is the parent for AIG Life in New Zealand.

Under the agreement, AIG will contribute the equity of AIA to a special purpose vehicle (SPV) in exchange for preferred and common interests in the SPV. 

The Federal Reserve will receive preferred interests in the AIA SPV of US$16 billion, which will reduce the debt owed by AIG to the US government.