AIG Shares Hit Eight-Month Low, Threaten A Government Loss

Shares in bailed-out insurer American International Group (AIG.N) fell to their lowest levels in nearly eight months on Monday, potentially moving them into loss-making territory for the U.S. Treasury.

The Treasury holds 92.11 percent of AIG and has a break-even point of about $28.72 per share on the stock.

AIG shares fell 3.7 percent to $29.57 in morning trade. Assuming the government were to sell the stock at a 3 percent discount to its closing price -- as researchers say the Treasury did with its shares in Citigroup (C.N) -- it would lose money on the sale.

In mid-January, the government stood to make a profit of more than $27 billion on its AIG stock, but the shares have lost more than a third of their value since. Last Thursday, AIG reported a loss of more than $1 billion from continuing operations for the first quarter.

The Treasury and the company are expected to sell billions of dollars in stock this month, as the company demonstrates an ability to raise capital and the government embarks on reducing its stake. AIG has said it expects the government to have sold off its whole position by mid-2012.

(Reporting by Ben Berkowitz, editing by Gerald E. McCormick)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[Tobin C Rote]

10:39 AM on 05/11/2011

Has anyone noticed that most of the Huffpost Super Users posts are simple one sentence posts that generally tend to do nothing but insult the right wingers? Just askin'!

[Tobin C Rote]

10:32 AM on 05/11/2011

Just want to point out that, today, the governments "investment" in AIG has increased in value by +/-$2.5 Billion. Bad news dropped the share price a couple of days ago. This created a "buying" opportunity. The smarter investors recognize that, once AIG works its way thru its problems, it will be a good investment.

[SF Patriot]

03:52 AM on 05/10/2011

The greatest t hing that could happen is that AIG and the pensions of the politicians who continuely will not allow themselves to be controlled by the same terms for Healthcare and pensions go Bankrupt nd their pensions be worth pennies on the dollars. Then and only then will they understand what they have allowed to happen to the average american.

[vesalagolf]

01:49 AM on 05/10/2011

Is there anyone out there that still thinks the Dems should be making economic policy? Liberal government regulations caused a lot of people to get loans that they never had a prayer of paying back. Remember you can not have social policies that you can not afford to pay for. Y'all better buy GOLD. You are going to need it.

[JacklynD]

03:14 AM on 05/10/2011

The only problem is that this was George W. Bush's idea. It has absolutely nothing to do with President Obama. If you're going to make statements like you just did you should really do some research. When you do you will find out the United States of America prospers more under Democratic Presidents than Republicans. That's a fact.

September 18th 2008

President Bush has defended the virtual nationalisation of the troubled insurance giant AIG as regulators moved to stop traders making money out of the Wall Street meltdown.
The White House tried to bolster public confidence after the government bail-out failed to reassure panic-stricken investors, with the Dow Jones index down more than 300 points during afternoon trading.

Stocks plunged as the market tried to evaluate what to make of the about-turn by the Bush administration, which last weekend appeared to signal an an end to federal rescue of private firms by allowing Lehman Brothers to go to the wall.

[vesalagolf]

05:41 AM on 05/10/2011

It is a fact that the liberal dems led by Barney Frank passed the Financial Modernization Act under Clinton. This law passed the lending regulations that caused the real estate mess that we are in now. A few of the things that were made legal under the liberal democratic president clinton are. 1.The liars loan.( No income verification) 2. No down payment. 3. 120 % loans . All this worked fine for years as long as prices went up. Once prices came down you have the biggest mess since the depression. Others things in this bill like credit default swaps are financial nightmares because of the leverage allowed. It is not sound. It is a direct result of liberal democrat regulations.
Did these things manifest themselves in Bush's term. Yes. Are they his fault? NO !!!! They belong to Barney Frank. Clinton was busy with Monica. I do not think anyone blames him. Although he did sign the bill into law. Do you want me to start in on Carter? Only IVORY TOWER LIBERAL FINANCIAL ILLITERATES think dems financial policy is sound. Just look what is happening to the national debt. Do you understand what QE means. Quantitative easing is monetizing the national debt. Have you ever heard of INFLATION? If you know how to take advantage of these things you will do very well in the financial markets just like some of us have done the last few years. Most do not.

[mfgarrison]

01:42 AM on 05/10/2011

hmmm, the gov't says that it's going to sell and the price drops. what a surprise. doesn't this hap-pen anytime a big investor sells lots of stock? why is this a story? is it time for another wall st bashing? maybe to soften us up for a big tax hike on the rich? no. couldn't be.

[vesalagolf]

02:07 AM on 05/10/2011

You do not have much experience with the financial markets do you? The stock can not be going down because a " big investor sold lots of stock" because THEY HAVE NOT SOLD THE STOCK YET. The price of the stock is going down because AIG is going bankrupt. They are, they have been and they will continue to lose billions of dollars because liberal government regulations allowed them to leverage there portfolio to over 100 to 1. That means that a 1% move against them would bankrupt them. The market moved more than 20% against them. You do the math. obama pumped a lot of tax payer dollars in to slow the bankruptcy down but, it is coming. Just like GM.

[kentsezhi]

03:04 AM on 05/10/2011

vesalagolf- how much experience do You have in the financial market? Just the fact that a large investor claims they will be selling there stocks in a company can and in many cases does cause the value of stock to go down. The reason for this is because when smaller investors hear the new about the bigger investor they sell their stocks in order to get a higher price for themselves. If 100 small investors sell their stock, lets say 10 shares each, it will lower the value of the rest of the stocks in the company. An example of this would be the Great Depression. Get a grip on a situation before you try to insult other people with your lack of intellegence. Also the fact that the government under Bush failed at bailing out GM is not Obama's fault.

[JacklynD]

03:20 AM on 05/10/2011

President Bush's administration loaned the money to AIG.

[Condley]

01:11 AM on 05/10/2011

If the government Communiy Reinvestment Act had not forced banks to loan money to subprime buyers with no money down, then there would have never been a need for AIG private mortgage insurance. And an AIG bailout would have never been required. AIG's problems are a result of liberal social engineering.

[mfgarrison]

01:54 AM on 05/10/2011

they simply can not be convinced of that on this site. that would detract from the bush bashing and mean that their heroes have to accept a portion of the blame. not that bush doesn't deserve a good bit of bashing, i must say.

[JacklynD]

03:21 AM on 05/10/2011

Nice try but you don't get to rewrite history or the facts.

[kamact]

01:09 AM on 05/10/2011

Imagine this,...and that was your money

[jpoze]

12:56 AM on 05/10/2011

Yeah good. Government at work.

[ThisAlreadyHappened]

12:28 AM on 05/10/2011

:punches the dead horse:

[Voivode Vlad]

12:14 AM on 05/10/2011

I'm sure that before the month is out, John Boehner will be crying on the floor of the House for another bailout like he did for the last one.

[ricksophie]

12:59 AM on 05/10/2011

I though the AIG bailout was passed by Reid and Pelosi?

[vesalagolf]

02:10 AM on 05/10/2011

You left out with the blessing and help of obama.

[Barbara DeZan]

11:21 AM on 05/10/2011

TARP signed by Pres. G Bush on October 3, 2008.....

Instead of "thinking" maybe you should do a little reading....

[lovbuton]

11:51 PM on 05/09/2011

Take back their bonuses and throw them in jail!!

[lovbuton]

11:48 PM on 05/09/2011

We should have let them fail in the first place!!!

[bwaduh]

11:53 PM on 05/09/2011

I agree.

[vesalagolf]

02:12 AM on 05/10/2011

Like Gm the reason the got bailed out is they voted for obama.

[JacklynD]

03:18 AM on 05/10/2011

President Bush bailed out AIG and GM has paid back most of their loan (maybe even all of it).

[f260sprint]

11:10 PM on 05/09/2011

SURE JUST BAIL THEM OUT AGAIN AND LOOSE EVEN MORE MONEY 1

[Gerald Levin]

11:59 PM on 05/09/2011

It's "lose" numbnuts. not "loose". You work for AIG?

[vesalagolf]

02:13 AM on 05/10/2011

Maybe he works for obama.

[f260sprint]

10:38 AM on 05/10/2011

THANK YOU OH SO PERFECT GEARLD THE GREAT ONE ???

[RadicalAmerica]

10:04 PM on 05/09/2011

So the US can wash the loss against the profits made in GM.....

[vesalagolf]

02:15 AM on 05/10/2011

Just for the record. We lost money on the first sale of GM stock. We have about half of it left.

[jmaltus]

09:53 PM on 05/09/2011

Big surprise. The only things Tiny Tim and Ben can do is make money for bankers and steal from the taxpayers. Let's make certain we pay the AIG execs a large bonus first.