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Treasury Expected to Announce Plans to Sell AIG Stake, Repay Taxpayers


Posted on 27 Sep 2010

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According sources familiar in the matter, the U.S. Treasury Department may announce plans as early as this week to return American International Group Inc. to independence and recoup taxpayer money from the insurer's bailout.

The biggest part of that strategy is for Treasury to begin converting its $49 billion preferred stake into common stock for sales by the first half of next year, said the people, who declined to be identified because the negotiations are private. The timing of an announcement depends on the pace of talks between regulators and the New York-based insurer, and discussions may extend beyond this week, the people said.

The government is seeking to dispose of its AIG stake as Chief Executive Officer Robert Benmosche, 66, prepares divestitures of two non-U.S. divisions that he said would largely repay the firm’s Federal Reserve credit line. MetLife Inc. said this month its purchase of American Life Insurance Co., for about $15.5 billion, is “on track” to be completed on Nov. 1. AIG may hold an initial public offering of another business, AIA Group Ltd., in October.

The insurer’s objective is to “repay the taxpayers and position AIG, over time, as a strong, independent company worthy of investor confidence,” said Mark Herr, a spokesman for the firm. “We have been in discussions with the U.S. Treasury, the Federal Reserve Bank of New York and trustees of the AIG Trust over the terms of the government’s exit from AIG.”

Hong Kong-based AIA will probably boost pretax operating profit to at least $2 billion for the fiscal year ending Nov. 30, AIG disclosed Sept. 25 after providing the forecast to certain analysts.


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