openPR Logo
Press release

Dynamic Wealth Management Headlines: AIG Share Sale Raises $8.7 Billion

The U.S. Treasury Department and American International Group Inc. (AIG) raised $8.7 billion in a share offering, bringing the insurer a step closer to independence after its 2008 bailout.
The Treasury sold 200 million shares yesterday at $29 each, compared with the closing price of $29.46 on the New York Stock Exchange. The government, which retains a majority stake, needs to sell shares at an average of about $28.73 to recover a $47.5 billion investment. AIG disposed of 100 million shares, raising $2.9 billion, according to a statement from the company.
AIG, once the world’s largest insurer, is seeking private capital after a government rescue that swelled to $182.3 billion, including Federal Reserve support. The Treasury in 2010 sold the last of its holdings in Citigroup Inc. (C) and reduced its ownership in General Motors Co. (GM) to a minority stake. New York- based AIG is the only insurer that hasn’t repaid its bailout.
“Going out and standing on their own again is definitely what they want to do, and they’re beginning that process,” Cliff Gallant, a KBW Inc. analyst who rates AIG shares “underperform,” said in an interview. “The government can’t sell 90 percent in one swoop.”
The sales reduce the government’s AIG stake to about 77 percent from 92 percent. The Treasury plans subsequent sales to exit its AIG holding, a process that may take 18 months to two years, according to a person familiar with the matter, who declined to be identified because the discussions were private.
Scaled Back
The Treasury had been weighing a share sale with AIG for as much as $20 billion, according to another person familiar with the transaction. The plan was scaled back as the stock slid 39 percent this year through yesterday after AIG disclosed a $4.2 billion charge to fix a reserve shortfall and reported an 85 percent decline in first-quarter profit on earthquake claims.
AIG fell 0.8 percent to the equivalent of $29.16 as of 10:03 a.m. today in German trading.
AIG set the record straight yesterday on its pitch to investors, telling regulators that the Government Accountability Office and Office of the Special Inspector General for the Troubled Asset Relief Program hadn’t reviewed its insurance reserves. AIG called its statement a “clarification” of information it provided to prospective stock buyers.
AIG, led by Chief Executive Officer Robert Benmosche, will use $550 million of its proceeds from the sale to compensate investors for stock declines dating to then-New York Attorney General Eliot Spitzer’s 2004 accounting probe. A pension fund for Ohio firefighters is among the beneficiaries. AIG said the rest of the money will be used for general corporate purposes.
‘Important Milestone’
The offering “represents an important milestone as we continue to exit our stake in AIG and wind down TARP,” Treasury Secretary Timothy F. Geithner said in a statement. “The decision to provide this assistance was exceptionally difficult, but it’s clear today that it was essential to stopping a financial panic.”
The insurer may begin to repurchase stock as soon as next year, Benmosche, 66, said during the insurer’s annual meeting on May 11. Repurchases won’t start until the U.S. is repaid for bailing out AIG, Chairman Steve Miller said at the meeting.
A rebounding economy is allowing the Treasury to unwind bailouts from 2008 and 2009 that were designed to prevent a collapse of the banking system and protect jobs. The government cut its stake in Detroit-based GM to 33 percent and raised $13.6 billion in a November share sale.
Chrysler Bailout
The Treasury sold its remaining Citigroup stock for $10.5 billion in December and made more than $12 billion on its investment in the New York-based bank, including dividends. For the government to break even on its GM investment, it would have to sell remaining stock at about $53 a share, compared with yesterday’s closing price of $30.83.
Chrysler Group LLC, the U.S. automaker operated by Fiat SpA, repaid $5.9 billion in TARP funds, the Treasury said in its statement yesterday. The U.S. has recovered 75 percent of its investments through the bailout program, including proceeds from Chrysler and the AIG share sale, according to the statement.
The share offering was the first for AIG since May 2008 when it raised funds to cushion losses from subprime mortgages. Investors who bought stock then lost more than 90 percent of their investment if they still hold the shares.
Bank of America Corp. (BAC), Deutsche Bank AG, JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS) led underwriters in yesterday’s sale. The banks have the option to sell 45 million more shares to meet investor demand, with proceeds going to the Treasury.
Underwriters earned $43.5 million, or 0.5 percent, in fees, according to Bloomberg data. The average is 3 percent in U.S. additional share offerings this year excluding the AIG share sale, the data show.
‘Maximize Value’
The government won’t sell additional shares until after a 120-day lockup, Tim Massad, the Treasury’s acting assistant secretary for financial stability, said during a conference call with reporters after yesterday’s announcement. There’s no “specific timetable” for disposing of the rest of the shares, he said.
“We’re going to sell in a way to maximize value to the taxpayer,” said Massad. “With a company this large, that means either public offerings or dribbling it out, eventually we might be able to do that. We’re talking about a stake the value of which is over $40 billion.”
AIG was first rescued in September 2008 by the Fed after trading partners demanded payments on derivatives contracts. After three revisions, the firm’s lifeline included a $60 billion Fed credit facility, a Treasury investment of as much as $69.8 billion and up to $52.5 billion to buy mortgage-linked assets owned or backed by AIG. Benmosche repaid the Fed after AIG struck deals to sell its largest non-U.S. life insurers.
Bernanke’s Anger
AIG was deemed by the Treasury a “systemically significant failing institution” and was the only company to receive bailouts through a facility created for such firms. AIG had reported the biggest quarterly loss in U.S. corporate history in 2008 and posted almost $100 billion in net losses that year, fueled by bets on subprime-mortgage securities.
The business was akin to a hedge fund “attached to a large and stable insurance company,” Federal Reserve Chairman Ben S. Bernanke said in 2009. AIG’s bailout, a day after the September 2008 failure of Lehman Brothers Holdings Inc., made him “more angry” than any other episode in the financial crisis, he told lawmakers.

At the Dynamic Wealth Management Zurich, Switzerland, we realize that no two clients are the same. Every client has different financial needs, goals, and

plans. For this reason, the DWM offers a wide array of investment options to suit every client. We tailor your investment strategy to be as individual as you are.

Dynamic Wealth Management
Dynamic Wealth Management Zurich
148 Church Street
8th Floor
New York City, New York 10007
United States
+1 646 845 7300
info@dynamicwealthmanagementtips.com
http://dynamicwealthmanagementtips.com

This release was published on openPR.

Permanent link to this press release:

Copy
Please set a link in the press area of your homepage to this press release on openPR. openPR disclaims liability for any content contained in this release.

You can edit or delete your press release Dynamic Wealth Management Headlines: AIG Share Sale Raises $8.7 Billion here

News-ID: 205020 • Views: 1096

More Releases from Dynamic Wealth Management Zurich

Dynamic Wealth Management Headlines: Nigeria’s Economic growth and Statistics: …
Governor Sanusi Lamido Sanusi of the country’s apex Federal Reserve Institute, the Central Bank of Nigeria and its monetary policy committees retained the benchmark interest rate at 12 percent. The market did not anticipate any change of the monetary interest rate; therefore there was no negative or positive reaction to the outcome. Sanusi’s CBN cannot be accuse of not trying its best possible to utilize the tightening of the monetary
Dynamic Wealth Management Headlines: German Bunds Advance as French Borrowing Co …
German bonds rose as French borrowing costs climbed at an auction, stocks declined and European industrial orders increased less than analysts predicted, fueling concern the debt crisis is feeding an economic slump. Italian and Spanish bonds slid as Europe’s bailout fund sells notes at a yield spread almost seven times its first issue a year ago. Greek Prime Minister Lucas Papademos said his nation faces “the immediate risk” of a default
Dynamic Wealth Management Headlines: Europe,China Manufacturing Drops on Impact …
Dec. 1 (Bloomberg) — Manufacturing weakened from China to Europe last month as the euro region’s debt crisis darkened the outlook for the global economy. China’s manufacturing contracted in November for the first time since February 2009 as the property market cooled and Europe’s turmoil cut export demand. In Britain and the 17-nation euro area, manufacturing shrank at the fastest pace in about 2 1/2 years as the region edged toward
Dynamic Wealth Management Headlines: Opportunities for Africa from the global ec …
The recent global economic crisis has provided us in Africa with an opportunity to review how we do business and think about the future, a future that needs to be grounded in fairness, integrity and sustainable development as opposed to greed and cronyism that has all too often been the case in the past. I believe that a key factor for the future will be the role played by the

All 5 Releases


More Releases for AIG

Mobile Phone Insurance Market Is Booming Worldwide | AIG, Allianz Insurance
HTF MI recently introduced Global Mobile Phone Insurance Market study with in-depth overview, describing about the Product / Industry Scope and elaborates market outlook and status to 2023. The market Study is segmented by key regions which is accelerating the marketization. At present, the market is developing its presence and some of the key players from the complete study are AIG, Allianz Insurance, AmTrust International Underwriters, Apple, AT&T, AXA, Deutsche
Global Cyber Insurance Market 2018 -AIG, Chubb, XL Group, Beazley
Accord Market, recently published a detailed market research study focused on the “Cyber Insurance Market” across the global, regional and country level. The report provides 360° analysis of “Cyber Insurance Market” from view of manufacturers, regions, product types and end industries. The research report analyses and provides the historical data along with current performance of the global PP Pipe industry, and estimates the future trend of Cyber Insurance on the
SME Insurance Market: AXA, Allianz, AIG, Tokio Marine, ACE&Chubb
MarketResearchReports.Biz adds “Global SME Insurance Market Share, Size, Trends and Forecast Market Research Report” reports to its database. This report provides a strategic analysis of the SME Insurance market and the growth estimates for the forecasted period. The SME Insurance Market has been comprehensively detailed in the report with special focus on a range of key elements such as market share, forecast and base figures, CAGR, driving factors, growth restraints, and
Mobile Phone Insurance Market: AIG, Apple, AXA, Asurion, Assurant
MarketResearchReports.Biz adds “Global Mobile Phone Insurance Market Share, Size, Trends and Forecast Market Research Report” reports to its database. This report provides a strategic analysis of the Mobile Phone Insurance market and the growth estimates for the forecasted period. This report studies the global Mobile Phone Insurance market size, industry status and forecast, competition landscape and growth opportunity. This research report categorizes the global Mobile Phone Insurance market by companies, region,
Contractors Insurance Market: Nationwide, State Farm, Allianz, AIG, Tokio Marine
MarketResearchReports.Biz adds “Global Contractors Insurance Market Share, Size, Trends and Forecast Market Research Report” reports to its database. This report provides a strategic analysis of the Contractors Insurance market and the growth estimates for the forecasted period. The Contractors Insurance Market has been comprehensively detailed in the report with special focus on a range of key elements such as market share, forecast and base figures, CAGR, driving factors, growth restraints, and
Critical Illness Insurance Market Is Booming Worldwide | Allianz, AIG, AXA
HTF MI recently introduced Global Critical Illness Insurance Market study with in-depth overview, describing about the Product / Industry Scope and elaborates market outlook and status to 2023. The market Study is segmented by key regions which is accelerating the marketization. At present, the market is developing its presence and some of the key players from the complete study are China Life Insurance, Ping An Insurance, China Pacific Insurance, Aviva,