American International Group is planning to buy back less stock from the Treasury this year than analysts had expected, it announced today.
However, despite the disappointing news, John Nadel, an analyst at Sterne Agee & Leach in New York, said that he expects the Treasury Department’s interest in AIG stock to fall below 50 percent in the “near-term,” probably before Sept. 30, “when presumably AIG would enter its third quarter quiet period.”
That would likely trigger federal regulation of AIG. Currently, the U.S. Treasury owns 53 percent of AIG.
AIG also announced that it was selling only a portion of its remaining stake in American International Assurance, or AIA Group Ltd., its Hong Kong-based life insurance subsidiary, not the full amount that analysts had expected. It had been expected that AIG would sell all its remaining shares in AIA after a so-called “lockup period” ended Tuesday, raising an estimated $7.5 billion. In today’s announcement, AIG said that it has commenced a sale in Hong Kong of up to $2 billion worth of ordinary shares of AIA.
After that sale is completed, AIA Aurora LLC, a wholly-owned subsidiary of AIG, expects to transfer all of its remaining interest in AIA to its parent, AIG.
This is the third time that AIG has offered shares of AIA, the third-largest Asia-based insurer by market value. The sale will leave AIG with a 13.6 percent stake in the Hong Kong-based company.
Additionally, AIG’s board said it had authorized the repurchase of up to $5 billion of its stock from the Treasury.
Nadel had expected AIG to authorize the purchase of $10 billion of its stock from the Treasury Department by the end of the year.