Boston, MA 04/09/2014 (wallstreetpr) – American International Group Inc (NYSE:AIG) announced it will redeem outstanding notes bearing coupon rate of 3 percent and are due 2015. The notes will be redeemed on May 5, 2014.
The company said holders will receive redemption price on every $1,000 principal amount. Accrued and unpaid interest on the notes will also be paid. Given that the notes fall under Direct Investment Book, the company said redemption will be made from cash allocation of DIB.
Financial flexibility
American International Group Inc (NYSE:AIG) currently enjoys amble cash flexibility. In this position, the company is able to comfortably support notes repayment. The amble cash in the company is due to big contribution from subsidiaries. The company realized increased contribution in 2013 compared with 2012. In 2013, subsidiaries made total cash distribution of $8.7 billion, well ahead of $5.2 billion total cash distribution in 2012. Thus, the company currently has strong cash position.
Moreover, the company is poised achieve even greater liquidity strength given its pending divestment of ILFC. The completion of the transaction is expected to further boost cash position and improve the company’s credit profile.
Reducing debt while time allows
American International Group Inc (NYSE:AIG) is trimming its debt obligation at this time that it is enjoying good cash flexibility. Its healthy and consistent debt repayment record is obvious. The company trimmed its debt to $41.7 billion in 2013, a significant improvement from debt of $48.5 billion in 2012. Effective debt management is a clear strength in AIG. And cutting down on debt obligations should help the insurance giant to take away a lot of burden currently on its shoulders so that it can gain focus on core business activities.
Shares of the company gained 0.83 percent in the last session to settle at $50.04 per share.
American International Group Inc (NYSE:AIG) is currently fighting possible fine from New York regulators over its marketing activities. The insurer is accused by the state of running overseas marketing activities without due license. But AIG holds that imposing fines on it will be unconstitutional.
