(Updates share price, adds background on bailout and details
from SEC filing)
Sept 10 American International Group (AIG.N)
shares fell 1.5 percent on Monday after the U.S. Treasury
Department said it will sell $18 billion of the insurance
The offering represents the government's biggest sell-down
of AIG since rescuing the insurer with a bailout in 2008, and
will reduce its stake to roughly 20 percent from a current level
of 53 percent.
The Treasury Department and Federal Reserve extended a
combined $182 billion lifeline to AIG at the peak of the
financial crisis, after the insurer became entangled in
Some of that money was never used and the bulk of the
remaining bailout money has been recouped through stock
offerings and asset sales. AIG still owes U.S. taxpayers $23.3
billion, according to a tally by ProPublica.
AIG itself will buy back $5 billion of its own shares in the
upcoming stock sale, with the rest of the shares going to the
AIG will use $3 billion worth of cash and short-term
securities, and $2 billion in proceeds from the sale of its
stake in Asian life insurer AIA Group to buy back stock from the
government, the company said in a securities filing on Monday.
The Treasury Department announced its plans on Sunday and
AIG shares were lower on Monday in late morning trade, down 51
cents at $33.48. Investors had widely expected the Treasury to
cash out of its AIG shares, but many investors had expected the
sales to happen over a longer period of time.
AIG's largest shareholder, Bruce Berkowitz, declined to
comment on the matter through a spokeswoman.
Underwriters for the deal include Citigroup Inc (C.N),
Deutsche Bank AG (DBKGn.DE), Goldman Sachs Group Inc (GS.N),
JPMorgan (JPM.N), Bank of America Corp's (BAC.N) Merrill Lynch
division, Barclays PLC (BARC.L), Morgan Stanley (MS.N), Royal
Bank of Canada's (RY.TO) RBC Capital Markets division, UBS AG
<UBSN.VX, Wells Fargo & Co (WFC.N), Credit Suisse CSGN.VX and
Macquarie Group Ltd (MQG.AX).
Treasury's sale comes as President Barack Obama campaigns
for a second term and has been forced to defend his support of
decisions to use taxpayer money to prop up companies during the
The administration has been unwinding its position in the
politically unpopular financial crisis programs ahead of the
election, amid heavy Republican campaign pressure over the value
of the bailouts, with more than 300 small banks having yet to
(Reporting By Dan Wilchins, Ben Berkowitz and Lauren Tara
LaCapra; Editing by Andrea Ricci and Tim Dobbyn)
Keywords: AIG TREASURY
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