The Treasury Department completed its offering of 636.9 million shares of American International Group stock. It includes 153.8 million shares purchased by AIG for $5 billion, equaling the combined amount of repurchases it made in the past two quarters.
The Treasury received $20.7 billion from the offering, reducing its remaining investment in AIG to 234.2 million shares of common stock, or 15.9% of outstanding shares from 53.4%.
The Treasury and the Federal Reserve Bank of New York have received a combined positive return of $15.1 billion from their overall $182.3 billion commitment to AIG. This profit does not include Treasury’s remaining stake in AIG, which, if valued at the September 13 closing price of $34.44 per share, would provide an additional profit of $8.1 billion.
“The latest round of buybacks is an acceleration from the prior two quarters,” SNL Financial analyst Thomas Mason said.
A email from the business intelligence services company also noted the “massive buybacks” from AIG make it the biggest repurchaser of its own stock, in dollar terms.
AIG bought 103.4 million shares from a Treasury offering in the first quarter, which, at $29 per share, amounted to $3 billion and roughly half of the 206.9 million shares offered by the government, Mason noted.
In the second quarter, Treasury unloaded 188.5 million shares at $30.50 per share, and AIG’s board allowed the insurer to pick up roughly 65.6 million shares, representing about 35% of the total and $2 billion worth of stock.
AIG still had roughly $30.4 billion in stock outstanding as of June 30, according to the Special Inspector General of the Troubled Asset Relief Program.
In August, the Federal Reserve sold its remaining mortgage bonds bought from AIG as part of its commitment to bail out the firm. Those sales and the TARP unwinding by Treasury are expected to generate a return for the original $161 billion in taxpayer money originally committed to bail out AIG, according to SIGTARP.