About $13 billion of shares will be sold to private investors, an allocation larger than in any of the past four offerings. In the first offering, in May 2011, AIG and Treasury sold a combined $8.7 billion of shares at $29 apiece.
AIG will repurchase as much as $5 billion of shares in the current offering, which will cut the U.S. stake in the firm to below 50 percent for the first time since the bailout that swelled to as much as $182.3 billion. The U.S. would own about 23 percent of New York-based AIG if it had sold stock at the Sept. 7 closing price of $33.99, data compiled by Bloomberg show.
The Treasury Department cut its stake to 53 percent in the last four share sales and raised about $23.3 billion. The fourth offering, announced Aug. 3, came the same week that AIG reported a 27 percent increase in second-quarter net income to $2.33 billion, driven by improving results at its property-casualty operation.
After the U.S. stake falls below 50 percent, AIG will be regulated by the Federal Reserve as a savings and loan holding company because it owns a bank, the firm said in a preliminary prospectus supplement.
AIG may face capital requirements and limits on its ability to repurchase stock or pay a dividend, under Fed oversight, according to the prospectus. The insurer is considering whether to close its bank unit to prepare for more government regulation including the Volcker rule, which limits proprietary trading and investing in private equity or hedge funds, said its chief executive officer, Robert Benmosche, last month.
The U.S. needs to average about $28.73 per share on the sales to break even on the stake it acquired as part of the bailout, excluding unpaid dividends and fees, according to the Government Accountability Office. The first two offerings were priced at $29 a share, and the second two at $30.50 apiece.
The Treasury's shares are the final piece of AIG's bailout that began in 2008 and swelled to as much as $182.3 billion, including support from the Federal Reserve Bank of New York.