The latest sale of American International Group stock nowunderway by the U.S. Treasury means that the federal government hasnow fully recouped its investment in the company and has alreadymade $15.1 billion on its investment, AIG and Treasury officialssaid last night.

The decision of the government to reduce its stake sodrastically prompted Standard & Poor's to change the outlook onthe AIG holding company to negative from stable, but S&P didreaffirm its 'A-' long-term counterparty credit rating.

"We are no longer giving credit for government support in theholding-company rating," S&P officials say.

S&P credit analyst John Iten also says he expects Treasuryto sell its remaining holdings in the "near to medium term,"

Iten says S&P changed its outlook on AIG because, whileresults of its core Chartis and SunAmerica operating companies areimproving, the government decision to lower its ownership stake ofAIG faster than expected means there is greater risk associatedwith paying off its current debt.

The latest sale reduces Treasury's ownership of AIG to 15.9percent, down from 53.4 percent before the sale, as underwritersexercised their option to buy 83.1 million additional shares of AIGthrough an over-allotment option. If underwriters had not exercisedthat option, the government's stake would have been 21.3percent.

According to S&P, the total return to the U.S. governmentwill be $20.7 billion.

"This offering, Treasury's largest to date, makes America wholeon its investments in AIG plus a profit," says Robert Benmosche,AIG president and CEO.

"We are close to achieving what most outside AIG thoughtunimaginable. The people of AIG never lost faith, kept working, andare grateful for being given the chance to make good on this goal,"Benmosche adds.

According to Benmosche, the Treasury and the Federal Reserve'scombined $182 billion commitment made to stabilize AIG during thefinancial crisis "is now fully recovered."

He says that through repayments of principal andreductions/cancellations in commitments ($176.1 billion), as wellas additional income from interest, fees, and other gains ($18.6billion), Treasury and the Federal Reserve have now recovered acombined total of $194.7 billion (before the exercise of theunderwriters' over-allotment option)—representing a positive returnof $12.4 billion to date compared to the original combined $182.3billion commitment.

Future sales of Treasury's remaining AIG common stock holdingswill provide an additional return to taxpayers, Benmosche says.

Treasury Sunday night said it was offering the 553.8 millionshares to an underwriting group, which Monday offered it to thepublic at $32.50 a share.

Simultaneously, AIG said it would purchase up to $5 billion ofthat stock.