Posted: Sunday, September 9th 2012 at 8:50pm
Treasury to cut AIG stake below half in $18B sale
By The Associated Press
NEW YORK - The U.S. government is selling more of its shares in insurer American International Group Inc., 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 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.
Associated Categories: Business News
© Copyright 2014 AccessNorthGa.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.