Allowing global insurer AIG to go bust would have been catastrophic for the economy, according to a Kent insurance broker.

Barrie Etchells, managing director of Belmont International, based in Otford, near Sevenoaks, welcomed the $85billion bail-out of the US giant, with a major presence in the UK.

On Tuesday night, the Federal Reserve took an 80 per cent stake in AIG, effectively nationalising the troubled company and Manchester United sponsor.

AIG employs around 3,000 people in the UK and operates from a number of local offices, including Croydon. They sell policies of all types, including travel, healthcare, property, accident and aviation.

Mr Etchells said the deal was good news. AIG could not be allowed to fail. "This to me is probably the best result because for the AIG worldwide to have gone bust would have been catastrophic. They are the world’s largest insurance company and it would have brought down lots of players."

He added that it was quite likely that the UK arm of AIG would be sold off as the American parent company struggled to repay its massive two-year loan from the US Federal Reserve. "One of the sales of their assets could be the UK division," he said.