Robert H. Benmosche, president and chief executive officer of American International Group, predicted that AIG's repayment of a line of credit it has with the Federal Reserve Bank of New York (FRBNY) could be complete before the end of this year, a company spokesperson confirmed.
AIG had previously announced that repayment to the FRBNY would close by the end of the 2011 first quarter.
Additionally, the spokesperson confirmed statements made by Mr. Benmosche about the possibility of AIG offering an undisclosed amount of stock in early 2011.
AIG will own less than 8 percent of its common stock once it uses $22 billion in available Troubled Asset Relief Program funds to purchase an equal amount of interest in each special purpose vehicle (SPV) holding American Group Ltd. and American Life Insurance Company (ALICO). AIG will then give the interest in the SPVs to the Treasury, which will allow the Treasury to sell stock to the public.
This could happen at the same time AIG offers its IPO.
The Treasury, which had owned 80 percent of AIG after the bailout two years ago, is to own 92.1 percent of the common stock of AIG after it converts the $49.1 billion of preferred shares it has under TARP into about 1.66 billion shares of common stock.
The Treasury has said it expects to earn a profit from its investment in AIG.
3Q LOSS ON GOVT. LOAN SETTLEMENT CHARGES
In other news, AIG also posted a $2.4 billion third-quarter loss on restructuring-related charges of $4.5 billion, as its chief executive boasted of solid insurance operating results.
The 2010 third-quarter results compare to a $455 million gain in the same quarter last year.
The New York-based insurer, which was bailed out by the government two years ago but has since announced steps to pay back the loans, said income from continuing operations was $2.05 billion compared to $1.93 billion a year ago during the third quarter.
Part of AIG's plan for restructuring and to repay taxpayers includes the sale of certain assets, some of which showed up on the balance sheet during the third quarter as losses and impairment charges.
AIG took a $1.9 billion loss on its pending sale of American General Finance and took two separate charges of $1.3 billion for deferred taxes and a goodwill impairment charge related to the pending sales of AIG Star Life Insurance Co. and AIG Edison Life Insurance Company to Prudential Financial Inc.
The sales will go toward repaying taxpayers. Two weeks before AIG announced its quarterly earnings the company said it raised enough money from its sale of American Life Insurance Company to MetLife Inc. and an initial public offering of AIA Group Ltd. in Hong King to repay a line of credit with the FRBNY.
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