AIG Asset Swap Off the Table

American International Group(AIG Quote) won't be raiding its insurance subsidiaries for cash after all. The New York State Insurance Department confirmed Wednesday that the proposed asset swap announced by Gov. David Paterson on Monday is no longer an option following the $85 billion bailout by the Federal Reserve.

"It died last night," said David Neustadt, the department's deputy superintendent for public information. "The asset swap will not now take place."

The death of the plan is good news for policyholders, who were left in the dark about their policies as the National Association of Insurance Commissioners, known as NAIC, announced yesterday afternoon that the insurance commissioners of New York and Pennsylvania were working with AIG. The insurer would have swapped its illiquid assets for its subsidiaries' liquid assets. ...