Access to $20 billion fund after deal

American International Group Inc, the largest US insurer, will only get access to the $20 billion lifeline announced yesterday by New York Governor David Paterson after a “broader deal” to save the company is made.

“They don’t have that $20 billion” yet, said David Neustadt, a spokesman for New York Insurance Superintendent Eric Dinallo, in an interview today. “It would be part of a broader deal. If there’s no broader deal, then it doesn’t happen.”

Paterson said yesterday the lifeline would “clear the way” for a loan from banks or the US AIG was working with Goldman Sachs Group Inc and JPMorgan Chase & Co to plug a $70 billion to $75 billion financing gap, according to people familiar with the situation yesterday.

 

AIG Chief Executive Officer Robert Willumstad is racing to raise capital to keep the insurer afloat amid credit-rating downgrades that may trigger more than $13 billion in collateral calls and $4.6 billion in payments on terminated credit-default swaps. The insurer pledged to protect banks and other investors against the default of $441 billion of fixed-income assets, including $57.8 billion in securities tied to sub-prime mortgages.