Summary
American International Group, Inc. (AIG) announced on November 23, 2020, an amendment to its existing Credit Agreement dated June 27, 2017. The primary focus of this amendment is to modify the definition of "Consolidated Net Worth" used for financial covenants. Specifically, it allows for the inclusion of cumulative unrealized gains and losses related to Fortitude Reinsurance Company Ltd.'s (Fortitude Re) funds withheld assets held by AIG. This adjustment is significant as these gains and losses would typically be excluded from Consolidated Net Worth calculations as they are reported under Accumulated Other Comprehensive Income (AOCI). By permitting their inclusion, AIG may have improved flexibility in meeting its minimum Consolidated Net Worth financial covenant, particularly in relation to its dealings with Fortitude Re. All other terms of the Credit Agreement remain unchanged.
Key Highlights
- 1AIG amended its Credit Agreement, dated June 27, 2017.
- 2The amendment modifies the definition of 'Consolidated Net Worth' for financial covenants.
- 3Cumulative unrealized gains/losses from Fortitude Re's funds withheld assets can now be included in Consolidated Net Worth.
- 4These specific gains/losses were previously excluded as part of Accumulated Other Comprehensive Income (AOCI).
- 5The change aims to facilitate compliance with the minimum Consolidated Net Worth covenant.
- 6No other terms or conditions of the Credit Agreement were altered.
- 7The amendment was effective November 23, 2020.