American International Group Inc. (AIG:US), the insurer majority owned by the U.S. Treasury Department after a 2008 bailout, said the U.S. may exit its stake in the company by next year.
“It will be Treasury’s choice as to when they want to liquidate” their shares, AIG Chairman Steve Miller said in a Bloomberg Television interview. “But it is certainly within the realm of possibility that it could happen within the next 12 months.”
Chief Executive Officer Robert Benmosche, 67, has repurchased shares from the government to help the company regain independence from its rescue and improve return on equity. New York-based AIG bought back $3 billion of stock from the Treasury last month at $29 a share as the department sold the same amount at that price in an offering (AIG:US) to investors, cutting the U.S. stake (AIG:US) to about 70 percent.
“We’re getting a lot closer to that point that we will have paid back every penny that taxpayers put into this company, plus a profit,” Miller said today in the interview in New York, where AIG is based. Matthew Anderson, a spokesman for the Treasury, declined to comment.
AIG may generate funds for buybacks through distributions from subsidiaries and additional asset sales, including the lowering of a stake in Hong Kong-based insurer AIA Group Ltd. (1299), Deutsche Bank AG’s Josh Shanker said in a note to clients last month. The analyst estimated that the company could repurchase $15 billion to $20 billion of stock in the next year.
AIG slipped 2.3 percent to $32.48 at 4:15 p.m. in New York. The U.S. needs to average at least $28.72 on its share sales to recoup taxpayer funds.
The insurer was rescued in 2008 in a bailout that swelled to $182.3 billion. The lifeline included a $60 billion Federal Reserve credit facility, a Treasury investment of as much as $69.8 billion and up to $52.5 billion to buy mortgage-linked assets owned or backed by AIG. The insurer has repaid the credit line. The Treasury’s stake, once more than 90 percent, has been lowered through share sales.
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