WASHINGTON — In a significant overhaul of their plan to rescue American Insurance Group, federal officials have agreed to inject billions of dollars into the insurance giant while easing terms of an existing credit line and creating two new lending programs for the firm.

To prop up "the systemically important" but ailing insurer, the Treasury Department Monday said it will funnel $40 billion of its $700 billion bailout funds into the insurance firm to purchase newly issued AIG preferred shares.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.