Alluring Stock Allows Treasury to Reduce Stake in AIG

“We expect AIG will have buyback capacity of between $7.5 – $10 billion for the next secondary offering by the Treasury, meaning calendar year 2012 buybacks will likely end up totaling between $15.5  million to $18.billion,” Nadel said.

AIG has already repurchased $8 billion of its own stock from the Treasury this year.

In its latest update today of its stake in AIG, the Treasury Department said the most recent sale is expected to reduce the Treasury’s remaining investment in AIG to approximately $24.2 billion, consisting of approximately 871.1 million shares of common stock.

The Treasury said the government aid to AIG during the financial crisis totaled $182 billion, although guarantees and loans through other Federal Reserve facilities likely added to the total.

After giving effect to the offering, the government’s remaining investment of approximately $24.2 billion would represent a nearly 87% reduction from that original $182 billion commitment.

In addition to principal repayments, which have reduced the government’s remaining outstanding investment to $24.2 billion, the Federal Reserve and the Treasury have also received additional income beyond that from interest, fee, and other gains, the statement said.

That additional income beyond principal repayments totals $14 billion, including approximately $13 billion from the Federal Reserve’s investment and approximately $1 billion from Treasury’s investment, the statement said.