AIG Share Sale Nets $8.7 Billion

While the unwinding of the federal government’s ownership position in American International Group will take some time, this week the process began in earnest as the U.S. Treasury Department sold 200 million shares of the company on the open market.

The sale, combined with the simultaneous sale of 100 million shares by AIG, netted approximately $8.7 billion. While temporarily depressing the company share price, the offering is seen as vital to the company’s long-term health as it reduced the Treasury’s stake in AIG from 92% to 77%. Moreover, a Treasury official conceded to Reuters that the department does not have any specific timetable or deadline for selling its remaining 1.5 billions shares of AIG.

The company reiterated that it will not receive any of the proceeds from the sale of the shares of AIG common stock by Treasury. Earlier this month, AIG said it intends to use the proceeds from the offering to fund part of a previously disclosed litigation settlement and to use the balance for general corporate purposes. 

AIG has relied on a mix asset divestitures and stock sales as it attempts to pay back the $182 billion in federal assistance in received at the height of the financial crisis. In March, the company announced  it had received the consent of MetLife Inc. to offer for sale some of the securities AIG received in exchange for its ALICO unit.