AIG to Sell Shares of AIA to Help Repay Bailout

American International Group Inc. (AIG), the bailed-out insurer, said it’s selling shares of AIA Group Ltd. (1299) to unidentified institutional investors as it repays a U.S. government rescue that swelled to $182.3 billion.
The proceeds of the sale, expected to price no later than tomorrow, will be used to reduce obligations to the U.S. Treasury Department, New York-based AIG said yesterday in a statement. The insurer didn’t disclose how many AIA shares it was divesting.
AIG sold about two-thirds of Hong Kong-based AIA in a 2010 initial public offering to help repay the bailout. The remaining stake in the Asian insurer, with a market value of more than $14 billion, is part of the collateral backing obligations to the Treasury. Chief Executive Officer Robert Benmosche said last month that AIG may wait to sell its AIA stake and use the money to reduce the government’s 77 percent ownership.
“We can think about using the proceeds if we decide to sell AIA potentially for capital management,” Benmosche, 67, said at a Feb. 15 investor conference in New York. “Capital management means we can buy some of the overhang from the U.S. Treasury.”
AIG is barred from selling or hedging more than half of its remaining stake in AIA until April 18, the company has said in regulatory filings.
The Treasury sold 200 million AIG shares on May 24 for $29 each. The government must receive an average of at least $28.72 a share to recoup its investment. AIG shares surged 28 percent this year to $29.80 on March 2, as the insurer reported fourth- quarter profit of $19.8 billion tied to a tax benefit. The stock closed above the government’s break-even price on Feb. 28 for the first time since July. AIA has climbed 20 percent to HK$29.20 this year through March 2.