NEW YORK (Reuters) - New York Governor David Paterson said he and other state officials had reached an agreement with American International Group Inc that allows the insurer access to $20 billion of its own capital, staving off a liquidity crisis.
Under the plan, AIG will be able to shift the funds from its insurance subsidiaries to the parent company.
AIG had worked with New York officials through the weekend to shore up capital after rating agencies threatened downgrades.
AIG’s shares were down 55.6 percent at $5.39 after earlier touching $3.50.
The company has posted $18 billion in cumulative losses over the past three quarters on guarantees it wrote on mortgage-linked securities.
Paterson said he had worked with AIG in a bid to help save New York jobs, with the insurer employing 6,000 in Manhattan and 8,600 statewide. He added that the plan was carefully crafted to pose no risk to New York taxpayers.
New York Insurance Superintendent Eric Dinallo is appealing to the federal government on AIG’s behalf to provide it additional access to capital, Paterson said.
Reporting by Lilla Zuill; Editing by Lisa Von Ahn