General Insurance Article - US Treasury in profit after latest sale of AIG shares

 American International Group(AIG)has announced that the US Department of the Treasury has priced an offering of approximately 553.8 million shares of its AIG common stock at the initial public offering price of $32.50 per share. Treasury has also granted a 30-day option to the underwriters for the offering to purchase up to an additional approximately 83.1 million shares to cover over-allotments, if any. In connection with Treasury’s offering, AIG has agreed to purchase approximately 153.8 million shares of AIG common stock in the offering at the initial public offering price for an aggregate purchase amount of approximately $5bn.

 “This offering, the Treasury’s largest to date, makes America whole on its investments in AIG plus a profit,” said Robert H. Benmosche, AIG president and ceo. “We are close to achieving what most outside AIG thought unimaginable. The people of AIG never lost faith, kept working, and are grateful for being given the chance to make good on this goal.”

 The Treasury currently owns approximately 53.4% of AIG’s common stock outstanding. Assuming completion of this offering and a $5bn share repurchase at the initial public offering price of $32.50 per share, Treasury would own approximately 21.5% of AIG’s common stock then outstanding (approximately 15.9% if the over-allotment option is exercised in full).

 The US government said said it had now made a profit of around $12bn on the sale of AIG shares.