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Huge bailout for insurance giant

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The world's biggest insurer has been bailed out by an $85 billion (£47.2 billion) lifeline rescue package from the US Federal Reserve.

American International Group (AIG) operates under three main brands in the UK - AIG UK, AIG Life and AIG Direct - and sells insurance through high street names such Argos and Boots. The firm also underwrites product warranties for John Lewis department stores.

US regulators said a "disorderly failure" of AIG could undermine already fragile financial markets. The US government will receive a 79.9% equity stake in AIG as part of the rescue deal.

AIG, which is Premier League champions Manchester United's main sponsor, employs around 3,000 staff in the UK at 11 offices including Croydon, Reading, Bristol, Manchester and Glasgow.

AIG had earlier confirmed that it was reviewing its operations and looking at options with outside parties after shares fell dramatically over the past week amid concerns about its balance sheet.

© The Press Association 2008