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 16,805.41 127.51 0.76%
Nasdaq 4,483.72 30.92 0.69%
S&P 500 1,964.58 13.76 0.71%
Treasuries 2.27 -0.00 -0.09%
Data as of 3:30am ET
Company Price Change % Change
Ford Motor Co 13.78 -0.62 -4.31%
Microsoft Corp 46.13 1.11 2.47%
Apple Inc 105.22 0.39 0.37%
Bank of America Corp... 16.72 0.12 0.72%
Yahoo! Inc 43.50 0.90 2.11%
Data as of Oct 24

Sections

New York headlines took a straight forward and direct approach with NYC's Ebola news. More

The midterm elections are around the corner, and the economy remains a top concern. With unemployment down and inflation low, why do people still feel the economy stinks? More

Shares of Facebook recently topped $80. They've more than quadrupled from their post-IPO lows of two years ago. Can Mark Zuckerberg keep the momentum in mobile going? More

Using technology developed for the military and implemented in Iraq, schools have installed alarm systems that detect gunfire. More

If you're looking to fly this holiday season, the clock's ticking to get the best prices. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.