AIG moves into the black for top holder: U.S.

By Jessica Dickler, staff writer


NEW YORK (CNNMoney.com) -- The Treasury Department's multi-billion dollar bailout of American International Group moved into the black after the insurer completed two transactions that raised nearly $37 billion, the department said Monday.

The U.S. government would make a profit on the bailout if it is able to sell its investment in the insurer at the current price over a period of time -- something that is not a sure thing.

The Treasury statement came after AIG announced the completion of the sale of an insurance subsidiary, American Life Insurance Company, or ALICO, and the initial public offering of a second, AIA Group Limited, or AIA, which together raised about $36.71 billion.

The insurer said it expects to use the cash proceeds from the transactions to repay the credit facility extended to AIG by the Federal Reserve Bank of New York (FRBNY) and to make payments on other interests owned by the government.

"We promised the American taxpayers we would repay them and the initial public offering of AIA last week and the completion of the ALICO transaction move us closer to delivering on our promise," Robert Benmosche, AIG president and chief executive, said in a statement.

"These transactions will generate sufficient cash to allow AIG to pay off the FRBNY credit facility, marking a major milestone in our commitment to repay the American taxpayers," he added.

After the credit facility is repaid in full, the company has said the U.S. Treasury will exchange its $49.1 billion of preferred shares into 1.6 billion AIG common shares, a 92.1% stake in the company.

Based on Friday's closing price, Treasury said the shares would be worth $69.5 billion, well above the department's current $47.5 billion cash investment in the insurer.

The company received bailout funds through the $700 billion Troubled Asset Relief Program (TARP), which Congress passed during the height of the financial crisis in October 2008. The government's loans to AIG totaled more than $180 billion at one time, and the company became one of the largest recipients of taxpayer assistance.

AIG's (AIG, Fortune 500) stock edged lower in midday trading. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 18,132.70 -81.72 -0.45%
Nasdaq 4,963.53 -24.36 -0.49%
S&P 500 2,104.50 -6.24 -0.30%
Treasuries 2.00 -0.01 -0.69%
Data as of 7:32pm ET
Company Price Change % Change
Bank of America Corp... 15.81 -0.23 -1.43%
Apple Inc 128.46 -1.96 -1.50%
General Electric Co 25.99 0.10 0.39%
Microsoft Corp 43.85 -0.20 -0.47%
Chesapeake Energy Co... 16.68 -0.52 -3.02%
Data as of Feb 27
Sponsors

Sections

Berkshire Hathaway CEO Warren Buffett released his 50th annual letter to shareholders. The Oracle of Omaha thinks the next 50 years will be great and knows who will replace him. More

Potential presidential candidate says that improvement in unemployment rate is due to millions of jobless not being counted. More

With the death of Leonard Nimoy, the actor who played Star Trek's Spock, we remember his character's legacy: The technology we use every day. More

A social media frenzy about the color of a dress is bringing fame and fortune for one small British fashion company. More

The top 5 consumer complaints have to do with identity theft, debt collectors, imposters, telephone companies and banks. More