AIG has raised a total of approximately $37 billion with which to repay the federal government after an IPO of American International Insurance Co. (AIA) Ltd. of Hong Kong, which brought $20.5 billion into its coffers, and the sale of American Life Insurance Co. (ALICO) to MetLife for $16 billion, according to a report from NU Online News Service on Monday. The money will go to the U.S. Treasury Department and the Federal Reserve Bank of New York.
The ALICO sale was for a mix of cash and MetLife securities, which AIG says it will sell over time, depending on market conditions and subject to lock-up provisions. The cash will be used to implement an AIG restructuring plan that was announced on Sept. 30.
The restructuring is planned through $22 billion in TARP funds that AIG hopes to draw from the Treasury Department so that it can purchase the N.Y. Fed’s preferred interests in AIA and ALICO currently being held in special purpose vehicles. The Treasury Department will then get those interests, and says that after restructuring, it will own approximately 92.1% of AIG’s common stock; that amounts to about 1.7 billion shares that, based on AIG’s closing price on October 29, would be worth about $69.5 billion. On Monday AIG’s shares fell $0.09 to $41.92.
The Treasury Department expects to make a profit on its AIG loans and investments once the restructuring is completed. Profit will depend on how AIG’s stock price behaves in the market.