AIG Offering Raises $8.7 Billion for U.S., Insurer

By Noah Buhayar - May 24, 2011 2:48 PM PT

The U.S. Treasury Department and American International Group Inc. (AIG) raised $8.7 billion in a share sale, bringing the insurer one step closer to independence after its 2008 bailout.

Treasury and New York-based AIG sold a combined total of 300 million shares at $29 each, compared with today’s closing price of $29.46 on the New York Stock Exchange, according to data compiled by Bloomberg. The government, which retains a majority stake, needs to sell shares at an average of about $28.72 to recover a $47.5 billion investment.

AIG, once the world’s largest insurer, is seeking private capital after ceding ownership to the government in exchange for a rescue that swelled to $182.3 billion, including Federal Reserve support. Treasury in 2010 sold the last of its holdings in Citigroup Inc. (C) and reduced its ownership in General Motors Co. (GM) to a minority stake. AIG is the only insurer that hasn’t repaid its Treasury bailout.

Treasury had been weighing a sale with AIG of as much as $20 billion, according to a person familiar with the transaction, who declined to be identified because the discussions were private. The plan was scaled back as the stock slid 39 percent this year. AIG said this month that it would sell 100 million shares and Treasury 200 million.

Editors: Dan Kraut, Peter Eichenbaum

To contact the reporters on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

http://www.bloomberg.com/news/2011-05-2 ... surer.html