AIG’s Benmosche Says Treasury May Sell Rest of Stake in 2012

The U.S. Treasury Department may sell the rest of its holdings in insurer American International Group Inc. (AIG) before 2013, Chief Executive Officer Robert Benmosche said. Shares fell the most since June.

“We think the Treasury will sell the remaining stake some time this year,” Benmosche said today at an event in Madrid. “Their lockup ends in November and the window opens up.”

The U.S. cut its stake in AIG to 16 percent from 77 percent in four share sales this year, most recently in September, after acquiring 92 percent in a bailout during the financial crisis. While the government has recouped the original cost of rescuing AIG, the success of bailing out financial firms and automakers has become an issue in the U.S. presidential campaign.

Selling more shares could help the U.S. reduce the cost of the bailouts for taxpayers. AIG dropped 4.1 percent to close at $35.70 in New York and remains above Treasury’s break-even cost of about $28.73. The shares have gained 54 percent this year.

“Our hope is they’re gone,” Benmosche said today. “If they’re gone, that’s fine, and if they’re not gone, that’s fine.”

Matt Anderson, a Treasury spokesman, declined to comment. The lockup after the September share sale expires Nov. 9, and AIG is scheduled to report third-quarter results on Nov. 1.

President Barack Obama and Republican challenger Mitt Romney sparred over the auto industry portion of the bailouts during their Oct. 16 debate. The U.S. still owns stakes in General Motors Co. and auto lender Ally Financial Inc.

Funds Recovered

The U.S. recovered its full $182.3 billion commitment to New York-based AIG with a profit after Treasury’s stock sale in September. The profit includes results from the Federal Reserve Bank of New York portion of the rescue, which included a credit line and the purchase of mortgage-linked securities.

AIG sold units in Asia to rivals MetLife Inc. and Prudential Financial Inc. to help repay the bailout, scaling back in the region. The company is working to improve results at its Chartis property-casualty unit by shunning lower-priced business, as Benmosche seeks to attract private investors.

Benmosche, who is fighting cancer, said he would like to keep working for the insurer until 2014.

“My energy levels are great, I feel pretty good about this job, I’m loving this job,” he said today. “I’ve told the board I would like to stay on to 2014 if they want and my health holds up.”

To contact the reporters on this story: Charles Penty in Madrid at cpenty@bloomberg.net; Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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