AIG Aims for Share Sale in 2011 as U.S. Reduces Stake

American International Group Inc., the bailed-out insurer, aims to sell shares early next year as the government winds down its stake in the company.

“We hope to be able to go to the market with a public offering of AIG this spring, but we have work to do to make that happen,” Mark Herr, a spokesman for the New York-based insurer, said in a statement today. “We are working as diligently as we can to achieve this as quickly as possible, subject to market conditions.”

The Treasury Department said in September it plans to convert its $49 billion preferred stake in the insurer into common shares and sell the securities. The company and Treasury may hold an offering for the stock in the first half of next year and raise more than $10 billion, Reuters reported, citing unidentified people. The Wall Street Journal said the U.S. aims to dispose of more than $15 billion in shares, with the insurer selling at least $2 billion in new stock.

The U.S. is selling holdings in financial firms that taxpayers bailed out at the depths of the financial crisis. The Treasury this week divested its remaining stock in Citigroup Inc. for $10.5 billion.

AIG slipped 94 cents, or 2.1 percent, to $43.01 at 12:47 p.m. in New York Stock Exchange composite trading. The insurer has advanced about 43 percent this year. The U.S. will hold about 92 percent of the common shares after the conversion.

Capital Markets

Chief Executive Officer Robert Benmosche is seeking funds from private investors to replace U.S. capital. The company sold $2 billion of bonds on Nov. 30 in its first offering since the 2008 bailout.

“We are completely focused on finishing work on the plan to restructure AIG and put it in a stronger position to begin repaying taxpayers and return fully to the private sector,” said Mark Paustenbach, a Treasury spokesman. “We are making good progress on the recapitalization plan but it is premature to speculate about next steps.”

AIG is focusing on global property-casualty coverage and U.S. life insurance after selling more than $50 billion in assets to help repay its bailout. The $182.3 billion rescue includes a $60 billion Federal Reserve credit line, an investment of as much as $69.8 billion from Treasury, and up to $52.5 billion to buy mortgage-linked securities owned or backed by AIG.

Hartford Financial Services Group Inc. and Lincoln National Corp., the other two U.S. insurers bailed out by the Treasury, repaid their rescues this year.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE