Treasury to Cut AIG Stake Below Half in $18 Billion Sale

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AIGNEW YORK -- The U.S. government is selling more of its shares in insurer American International Group (AIG), in a move that should decrease its holdings below a majority stake for the first time since the $182 billion bailout in 2008.

The sale is the latest step to recoup taxpayer money spent on the largest bailout of the financial crisis.

AIG said Sunday that the Treasury Department is selling $18 billion worth of its common shares to institutional investors.

If there is more demand, the government will grant the underwriters a 30-day option to buy up to $2.7 billion more of its stake in the company.

AIG said it will buy back $5 billion worth. The price is not yet determined.

The move should reduce the government's stake in AIG to less than 20 percent of the insurer's total outstanding stock. Right now, Treasury holds about 53 percent of the company, or more than 871 billion shares of common stock, worth about $30 billion.

The government has reduced its stake from 92 percent of the company, after selling shares four times in the last couple of years for a total of $23.3 billion. The most recent sale of about $5 billion was in early August.

AIG, which is based in New York, nearly collapsed in 2008. It received $182 billion from the U.S. government - the biggest of the Wall Street bailout packages - after suffering massive losses from investments in derivatives.

The company has sold off several different units in order to raise money to pay off its debt to the government.

The insurer has been profitable the last two years and is expected to post a net profit of $7.4 billion in the year through this December. CEO Robert Benmosche said last month the company was close to its goal of repaying the government everything it provided to AIG during the financial crisis "plus a profit."

The bailout sparked public outrage and demands in Congress for an investigation, especially after it was revealed that millions in bonuses would go to employees in the AIG division most responsible for the company's need for a bailout. The bonuses were found to be contractual obligations agreed upon years earlier, before AIG received the bailout.

AIG shares closed Friday at $33.99, up about 47 percent since the start of the year.


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grneydmuse

There had better be no more government bailouts of failing financial entities in my lifetime. Our own government is hanging on the brink of failure itself, and they are going to bail out others? What is wrong with this picture anyway?

September 10 2012 at 3:16 PM Report abuse +1 rate up rate down Reply
Don

No mattter when the bonus was planed it is not afordable in the existing financial climate. Limiting these outragiously high bonuses should not be allowed, it is a game played by the welthy at the middle class expense.

September 10 2012 at 2:25 PM Report abuse -1 rate up rate down Reply
George

Are you better off 4 yrs ago has nothing to do with my tax payer $$ for AIG. Think AIG should not stop at buying back 5 billion, should buy back all this is still owed the tax payers. If they go bell-up again, screw 'em! Let them go bankrupt!!
Do not hate obama 'whosays29'!! Just no he is still a non-working king of campaigners and very noticeable missing from the dnc convention is anything about his past 3+ yrs in office as a selling point to re-elect him. Unless you count billy-bob's plea for another chance. That came across like the little boy telling mommy, I promise I'll do better, honest, I'll try harder, mommy' please give me another chance!!

September 10 2012 at 12:37 PM Report abuse -2 rate up rate down Reply
whosays29

I was way worse off when the Republicans left office. Don't hate Obama just cause your a hater.

September 10 2012 at 11:48 AM Report abuse -1 rate up rate down Reply
jdykbpl45

Are you better off now than you were four years ago?

September 10 2012 at 11:31 AM Report abuse +2 rate up rate down Reply
1 reply to jdykbpl45's comment
smaselli12

Negative, these last four years have been disasterous. We are moving toward a socialistic society, a death blow to businesses..................and everyone is wondering why there is no new investment in the private sector..................Obama and the socialists are killing America.

September 10 2012 at 12:37 PM Report abuse rate up rate down Reply