September 30, 2023

DealBook: A.I.G. Outlines Share Sale Plan

The American International Group on Wednesday laid out plans for its upcoming share offering as it moved to get off government life support.

In a regulatory filing on Wednesday, A.I.G. said it would sell 100 million shares. The government, which has a 92 percent stake in the insurer, will sell 200 million shares. After the offering, United States taxpayers will have a 77 percent stake in the company, according to the filing.

The filing did not disclose a specific price for the offering but based on the closing price of shares on Tuesday, it would amount to about $8.9 billion, much less than once anticipated. If demand is strong enough, underwriters will have the option to sell an additional 45 million shares.

A.I.G., which will not receive any money from the shares sold by the government, plans to use $550 million of its own proceed to help pay for a settlement related to several securities fraud lawsuits. The settlement was previously disclosed. The rest of the money will go toward “general corporate purposes.”

The last few months have been tough for A.I.G. On May 5, it reported that net income fell 85 percent in the first quarter, driven by charges related to the earthquake disaster in Japan and a restructuring of its government bailout. Revenue dropped 6 percent, to $17.4 billion.

Earlier this year, A.I.G. shares had surged to more than $62 but today they are trading for less than $30, the level at which the government is expected to break even on its bailout.

Even so, the offering is a big step for the company, which is looking regain its independence.

During the financial crisis, A.I.G. teetered on the verge of collapse before the government orchestrated a huge bailout. The rescue package eventually left taxpayers with a 92 percent stake in the company.

The share sale represents the latest step by A.I.G. to repay taxpayers. In January, the company paid off its debt to the Federal Reserve Bank of New York. It has also sold off various assets to raise capital as part of its plan.

The Treasury Department had indicated earlier that it would like to hold two stock sales this year, potentially bringing its stake in A.I.G. down to about 33 percent. But much will depend on market conditions and demand.

A.I.G.’s annual meeting is to take place on Wednesday.

Bank of America Merrill Lynch, Deutsche Bank Securities, Goldman Sachs and JPMorgan Chase are the main underwriters for the A.I.G. offering.

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