Friday, May 11, 2012 1:21:05 PM
Among the many bailouts of 2008 and 2009, AIG was always the outlier. It was the largest single recipient of funds, getting $182 billion from the Treasury Department and the New York Federal Reserve. It was the most infuriating, as a large chunk of the cash went directly to repay investment banks that had purchased junky insurance on junky assets from AIG. And it seemed the least likely to be returned. How could one company generate enough cash to return all that capital, while keeping shareholders happy and maintaining the level of financial strength that the markets and customers require from insurance companies?
The answer: slowly.
AIG was a very large company, with a bunch of very valuable, good (even excellent) businesses that was lashed to an extremely large unit, AIG Financial Products, which took on enormous liabilities without bothering to set aside the money to pay for them. The Fed saved AIG (and its counterparties) by taking huge portfolios of mortgage-backed securities and CDOs off its hands, and then extended credit that was to be backed by assets like AIG's Asian insurance operations. Over time, AIG staged a few very large asset sales and paid off a big chunk of the Fed loans. Then, as the credit markets healed, the securities that the New York Fed acquired rose in value and threw off interest. That dynamic, combined with periodic asset sales, has allowed Maiden Lane II and Maiden Lane III, the two vehicles created by the Fed, to pay down their loans with money left to spare.
That has left the stock of the company that is owned by the Treasury. As of last May, Treasury owned 1.455 billion shares of the company, equal to a 77 percent stake. The bailout won't be over until all those shares are either sold to the public, or sold back to the AIG. That process is continuing. In March, Treasury sold about 200 million shares of AIG worth $6 billion, cutting its stake to 70 percent. And this week, it took another step to reduce its position. In an offering, it sold 188.5 million shares at $30.50 each, bringing in $5.75 billion. That money, like all the returns from TARP programs, goes into Treasury's coffers to help pay for government operations.
Treasury still has a long way to go. The sale reduced the government's stake from 70 percent to 61 percent. (The details of Treasury's holdings can be seen here) So it will require about seven more sales of this magnitude before the taxpayers fully exit their "investment" in AIG. The good news is that AIG, which is once again a profitable company, is participating in the process by purchasing some of the shares directly from Treasury. In the most recent sale, AIG accounted for $2 billion of the $5.75 sale.
There's still a very long way to go. But there's at least a path to an exit. And the Government Accountability Office now believes the taxpayers could wind up turning a "profit" of $15.1 billion on the AIG rescue. In order for that to happen, AIG's stock will have to stay at or near current levels for long enough for the government to unload its remaining 1,059,616,821 shares!
Recent AIG News
- AIG Reports Strong First Quarter 2024 Results • Business Wire • 05/01/2024 08:16:00 PM
- AIG Appoints Kelly Lafnitzegger Executive Vice President and Chief Human Resources & Diversity Officer • Business Wire • 04/29/2024 08:20:00 PM
- Apple Loses Market Share in China, GM Surges in Pre-Market Following Upward Revisions for 2024 Projections, and More News • IH Market News • 04/23/2024 11:25:34 AM
- AIG Announces Leadership Change • Business Wire • 04/22/2024 11:30:00 AM
- コアブリッジ・ファイナンシャル、英国の生命保険事業のアビバへの売却を完了 • Business Wire • 04/09/2024 01:10:00 PM
- Corebridge Financial achève la vente de ses activités d’assurance vie au Royaume-Uni à Aviva plc • Business Wire • 04/09/2024 11:07:00 AM
- Corebridge Financial schließt den Verkauf des britischen Lebensversicherungsgeschäfts an Aviva plc ab • Business Wire • 04/09/2024 11:07:00 AM
- Corebridge Financial Completes Sale of UK Life Insurance Business to Aviva plc • Business Wire • 04/09/2024 06:19:00 AM
- AIG to Report First Quarter 2024 Financial Results on May 1, 2024, and Host Conference Call on May 2 • Business Wire • 04/03/2024 08:38:00 PM
- AIG Reports Excellent Fourth Quarter and Full Year 2023 Results • Business Wire • 02/13/2024 09:16:00 PM
- Chris Inglis Elected to AIG’s Board of Directors • Business Wire • 02/07/2024 09:16:00 PM
- AIG to Redeem its Series A Preferred Stock, Represented by Depositary Shares • Business Wire • 01/31/2024 09:16:00 PM
- AM Best Upgrades Issuer Credit Ratings for American International Group, Inc. and Its Property/Casualty Subsidiaries • Business Wire • 01/26/2024 08:50:00 PM
- AIG to Report Fourth Quarter and Full Year 2023 Financial Results on February 13, 2024, and Host Conference Call on February 14 • Business Wire • 01/16/2024 09:16:00 PM
- AIG Announces Closing of Secondary Offering of Corebridge Financial, Inc. Common Stock • Business Wire • 12/05/2023 02:22:00 PM
- Jimmy Dunne Elected to AIG’s Board of Directors • Business Wire • 12/04/2023 02:00:00 PM
- AIG Announces Pricing of Secondary Offering of Corebridge Financial, Inc. Common Stock • Business Wire • 12/01/2023 02:07:00 PM
- AIG Announces Launch of Secondary Offering of Corebridge Financial, Inc. Common Stock • Business Wire • 12/01/2023 11:08:00 AM
- Rose Marie Glazer Named General Counsel of AIG • Business Wire • 11/30/2023 09:16:00 PM
- AIG Announces Reference Yields and Total Consideration for its Tender Offer for Debt Securities • Business Wire • 11/21/2023 09:11:00 PM
- AIG Announces Early Results and Upsizing of Its Tender Offer for Debt Securities • Business Wire • 11/21/2023 01:30:00 PM
- AIG Appoints Roshan Navagamuwa as Executive Vice President and Chief Information Officer • Business Wire • 11/15/2023 09:16:00 PM
- AIG Announces Closing of Secondary Offering of Corebridge Financial, Inc. Common Stock • Business Wire • 11/08/2023 09:16:00 PM
- AIG Commences Cash Tender Offer for Debt Securities • Business Wire • 11/06/2023 09:15:00 PM
- AIG Announces Pricing of Secondary Offering of Corebridge Financial, Inc. Common Stock • Business Wire • 11/06/2023 02:11:00 PM
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Moon Equity Holdings, Corp. Announces Acquisition of Wikolo, Inc. • MONI • May 7, 2024 9:48 AM
NanoViricides Reports that the Phase I NV-387 Clinical Trial is Completed Successfully and Data Lock is Expected Soon • NNVC • May 2, 2024 10:07 AM
ILUS Files Form 10-K and Provides Shareholder Update • ILUS • May 2, 2024 8:52 AM
Avant Technologies Names New CEO Following Acquisition of Healthcare Technology and Data Integration Firm • AVAI • May 2, 2024 8:00 AM
Bantec Engaged in a Letter of Intent to Acquire a Small New Jersey Based Manufacturing Company • BANT • May 1, 2024 10:00 AM