American International Group's recapitalization efforts have resulted in the insurance giant nearly halving its debt and preferred equity/total capital ratio to 41.6 percent in 2011 compared to 81.2 percent in 2010, according to a Fitch Ratings Special Report on financial leverage for P&C insurers.
"During 2011, AIG took various steps to recapitalize and reduce the federal government's interest in the company," says Fitch.
The three primary factors driving improvement, according to the report: the repayment of about $21 billion in indebtedness under its Federal Reserve Bank of New York credit facility; the conversion of about $72 billion of government-owned preferred stock to common equity; and a reduction of AIG's deferred-tax asset valuation allowance by $16.6 billion.
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