US Profits from Sale of AIG Shares

American International Group Inc. (AIG) shares valued at $18 billion were sold by the U.S. government turning its bailout into a profit for taxpayers. The U.S. sold about 554 million shares at $32.50, the Treasury Department said yesterday in a statement. The U.S. has recovered its full $182.3 billion from the rescue with a profit of about $12.4 billion. AIG fell 2% to $33.30 before the announcement. Treasury still holds 317.2 million shares, valued at about $10.6 billion. “To stabilize and then restructure the company with a very substantial positive gain for the American taxpayer is a significant accomplishment,” Treasury Secretary Timothy Geithner said in the statement. “We need to continue the critical task of implementing Wall Street reform so that the American economy is never put in this position again.” AIG, once the world's largest insurer, was bailed out in 2008. The rescue was part of $12.8 trillion given to financial firms and automakers by the U.S. government and Federal Reserve to help manage the deepest financial crisis since the Great Depression. The sale cuts the government stake to 22% of AIG, marking the first time since the rescue that the U.S. doesn't hold majority control. AIG bought $5 billion of the shares in its efforts to regain independence according to CEO Robert Bermosche. He's raised funds for repurchases by divesting assets including much of its holdings in Hong Kong-based insurer AIA Group Ltd. The insurer has gained 44 % this year after plunging 98 percent in the prior five years that ended Dec. 31. Treasury had cut its stake in four earlier share sales raising about $23.3 billion. The fourth sale, announced Aug. 3, came the same time that AIG reported that second-quarter net income rose 27 percent from a year earlier to $2.33 billion, due to improvement at its property-casualty operation.