NEW YORK (AP) — The government and AIG, the giant insurer rescued with $182 billion at the depths of the 2008 financial meltdown, announced a plan Friday to end taxpayer involvement in the company over the next two years.
As part of the plan, AIG paid back its $21 billion outstanding balance to the New York branch of the Federal Reserve. The Treasury Department will now own a 92 percent stake in the company and begin unloading stock on the open market in March.
“Treasury remains optimistic that taxpayers will get back every dollar of their investment in AIG,” Treasury Secretary Timothy Geithner said in a statement.
In a separate statement, AIG President and CEO Robert H. Benmosche said: “Today, AIG, with the support of countless people, has accomplished a huge goal that many people once thought impossible: completely repaying the Federal Reserve Bank of New York.”
The rescue package for American International Group Inc., which included loans and guarantees, was the largest of any U.S. company that accepted government help during the September 2008 financial crisis.
At the time, federal officials worried that a collapse of AIG, which worked with hundreds of financial institutions around the world, would be a death blow to already fragile credit markets and possibly bring down the financial system itself.
The insurer became a touchstone for public outrage over excessive risk on Wall Street.
Under the plan announced Friday, the government will sell its stock over two years as market conditions allow.
The government holds roughly 1.67 billion shares of AIG now. Those shares were handed over to taxpayers at a value of just under $30 apiece and were trading Friday at about $54.
The two-year unwinding of the federal stake in the company is similar to an arrangement to end government involvement in Citigroup and in General Motors, which returned to the stock market this year after going through bankruptcy.
AIG’s repayment plan is being paid for with proceeds from a series of asset sales. On Thursday it agreed to sell its nearly full ownership in the third-largest insurance company in Taiwan for about $2.2 billion.
Last year, it sold an Asia-based life insurer to Britain’s Prudential PLC for $35.5 billion.
Besides repaying the U.S. government, AIG is restructuring itself to focus on its property, casualty and life insurance businesses as well as retirement services.
AP Economics Writer Martin Crutsinger contributed to this report from Washington.
Copyright © 2021 The Washington Times, LLC.