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.
Even Carl Icahn, one of President-elect Donald Trump's biggest cheerleaders on Wall Street, thinks the post-election exuberance in the stock market has gotten a bit out of hand. More
Republican leaders keep saying Obamacare is hurting the economy and killing jobs, but there's scant evidence for it. In fact, a number of studies show that the economy has been growing. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
The Los Angeles city attorney is suing four major retailers over claims that they deliberately inflated the original price on some items that misled customers into thinking they were getting a better deal. More