With the government’s sale of American International Group (NYSE:AIG) stock to be completed this week, its majority ownership in the company will end and the American taxpayer will gain an additional $2.7 billion in profits.
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The Treasury Department said Tuesday that the Wall Street underwriters of the Treasury’s AIG stock offering exercised their option to buy additional shares, which brought total sale proceeds to $20.7 billion. Yesterday’s announcement follows a sale of a large portion of AIG holdings by the Treasury made Monday. This $18 billion sale reduced the government’s stake in the company from 53.4 percent to only 15.9 percent.
After the Federal Reserve and the Treasury Department pledged more than $182 billion to keep AIG solvent when the insurance provider nearly went bankrupt in September 2008, many analysts predicted that the U.S. government would never recover all of the bailout funds. This week’s sale guarantees at least a $15.1 billion profit, and the figure will likely rise when the U.S. sells the remainder of its stake.
AIG still owes the U.S. Treasury $2.6 billion from the bailout, but this week’s stock sale plus the $17.7-billion profit made by the Federal Reserve Bank of New York means that AIG has repaid the approximately $130 billion used to rescue the company.
As for AIG, shares in the company’s stock are up 46.16 percent this year, and the stock, issued by the Treasury for $32.50, trades at $33.93 today.