AIG could announce exit plan in days

By Reuters
Posted Sep. 29, 2010 at 11:00 a.m.

American International Group is close to finalizing a plan for the U.S. government to sell its stake in the insurer and is hoping it will yield a profit for taxpayers who bailed out the company, Chairman Steve Miller said on Wednesday.

AIG also is close to a deal to sell two life insurance units in Japan, AIG Edison Life Insurance Co and AIG Star Life Insurance, to Prudential Financial Inc for about $4.8 billion in cash, a source familiar with the matter said.

The developments show AIG is making significant progress in disentangling itself from the government more than two years after it was first bailed out during the financial crisis. The government owns nearly 80 percent of AIG.

AIG’s shares rose 2 percent to $38.10 during morning trading on the New York Stock Exchange.

The insurer’s board is meeting later on Wednesday to discuss the exit plan, Miller said at the Dow Jones Private Equity Analyst conference in New York.

Miller, a corporate turnaround specialist who took over as chairman of the company in July, said that talks with the government were nearing a conclusion that could be a “win-win” deal for stakeholders.

Miller said AIG was hoping the plan would not only chart a path for repayment of the bailout, “but there is a strong possibility of significant profit to the taxpayers.”

The exit plan includes converting the Treasury’s $49 billion preferred stake in AIG into common stock, which sources have previously said will see the government’s stake in the insurer increase to over 90 percent and be sold over time.

“It will be a matter of balancing the speed of exit versus maximizing the value realized by the taxpayers,” Miller said.

Separately, CNBC reported that AIG’s board would finalize the exit plan on Wednesday and could announce the plan on Thursday, citing senior government officials.

Prudential’s shares were up 2.6 percent to $57.24 on the New York Stock Exchange.

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