The government did not rescue AIG with the intention
There is also a question of how much of the beleaguered insurer’s bandage skirt stock investors want. “The government has the political ambition and intention to reduce its holdings to zero,” said Joseph Schuster, founder of IPOX Schuster LLC, but added: “The stock needs to be absorbed by the market.”
Chief Executive Officer Robert Benmosche has said he expects the government to be out of its AIG position by mid-2012. Fitch Ratings said recently its own models for the company assume the government is out by the end of 2012.
A Treasury official said on Tuesday night that there was no specific timetable for the exit. He said that a full accounting would have to wait until the Treasury completes its exit, but he said he was hopeful the government would break even. [ID:nN24282319]
The government did not rescue AIG with the intention of turning a profit but to stem a worsening financial crisis in late 2008.
So far, the government is in the money: Tuesday’s share sale, which included 100 million shares sold by AIG, came at $29 a share, higher than the average price of $28.73 the Treasury needs to break even and at a 1.6 percent discount to Tuesday’s close.
Tuesday’s sale helps Treasury move closer to its break-even, and it raised $5.8 billion white herve leger against the $47.5 billion needed — but, broadly speaking, AIG’s shares have been trending downward. Over the course of the year, they have lost about 45 percent of their value.
AIG shares closed down 4 percent at $28.28 on Wednesday on the New York Stock Exchange.
Demand for AIG shares has not been as strong as some originally thought. The Treasury and the company agreed only earlier this month on the size of Tuesday’s offering but banking sources suggested earlier this year that the share sale could raise $10 billion to $20 billion.
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