MetLife's sale by AIG nets US$6.3b
By Martin Crutsinger |
March 4, 2011, Friday
|
Print Edition
Print Edition
THE United States Treasury Department said on Wednesday that a sale of MetLife Inc stock by American International Group Inc brought in US$6.3 billion, which will go toward repaying a portion of the taxpayer bailout of the insurance company.
The Treasury said the US$6.3 billion in gross proceeds from the sale would be used to redeem part of its US$18.2 billion investment in preferred equity shares in AIG.
AIG offered 146.8 million shares of its holdings in MetLife for sale and the stock sold at US$43.25 a share.
The MetLife stock sale is part of the US government's effort to wind down its largest and most complex rescue from the 2008 financial crisis, when it assembled a US$182 billion package to save New York-based AIG.
The government owns more than 1.6 billion shares of AIG common stock, giving it a 92 percent stake in the firm. The Treasury is expected to start selling those shares in March.
Tim Massad, Treasury's acting assistant secretary for financial security, labeled AIG's sale of its MetLife holdings evidence of a "remarkable turnaround" for AIG.
"We are optimistic about the prospects that taxpayers will recover every dollar invested in AIG - something that many thought would be impossible when these investments were first made," Massad said in a statement.
The stock sale weighed on MetLife's stock on Wednesday. Shares in the New York-based life insurer ended down US$2.63, or 5.7 percent, at US$43.41. AIG's shares rose 60 US cents, or 1.6 percent, to close at US$37.30.
The bailout of AIG became a symbol for excessive risk on Wall Street and a touchstone for public anger over the government's US$700 billion bailout program.
The AIG bailout, which included loans and federal guarantees, was the largest of a series of rescues announced during the stomach-churning weeks in the fall of 2008 at the height of the financial crisis. The Treasury made a total cash investment from its Troubled Asset Relief Program of US$68 billion.
The Federal Reserve also took part in the rescue and still holds many of the US$50 billion worth of complex derivatives that it took off AIG's books.
AIG first announced its repayment plan in September 2010 and since then has worked to raise cash to pay back the government by selling parts of itself around the world.
In addition to the MetLife stock that was sold on Wednesday, the Treasury said US$3 billion in MetLife equity units were also sold.
The Treasury said the proceeds from that sale would stay in an escrow account and would be used over the next two years to pay down its preferred equity interests in the company.
The Treasury said the US$6.3 billion in gross proceeds from the sale would be used to redeem part of its US$18.2 billion investment in preferred equity shares in AIG.
AIG offered 146.8 million shares of its holdings in MetLife for sale and the stock sold at US$43.25 a share.
The MetLife stock sale is part of the US government's effort to wind down its largest and most complex rescue from the 2008 financial crisis, when it assembled a US$182 billion package to save New York-based AIG.
The government owns more than 1.6 billion shares of AIG common stock, giving it a 92 percent stake in the firm. The Treasury is expected to start selling those shares in March.
Tim Massad, Treasury's acting assistant secretary for financial security, labeled AIG's sale of its MetLife holdings evidence of a "remarkable turnaround" for AIG.
"We are optimistic about the prospects that taxpayers will recover every dollar invested in AIG - something that many thought would be impossible when these investments were first made," Massad said in a statement.
The stock sale weighed on MetLife's stock on Wednesday. Shares in the New York-based life insurer ended down US$2.63, or 5.7 percent, at US$43.41. AIG's shares rose 60 US cents, or 1.6 percent, to close at US$37.30.
The bailout of AIG became a symbol for excessive risk on Wall Street and a touchstone for public anger over the government's US$700 billion bailout program.
The AIG bailout, which included loans and federal guarantees, was the largest of a series of rescues announced during the stomach-churning weeks in the fall of 2008 at the height of the financial crisis. The Treasury made a total cash investment from its Troubled Asset Relief Program of US$68 billion.
The Federal Reserve also took part in the rescue and still holds many of the US$50 billion worth of complex derivatives that it took off AIG's books.
AIG first announced its repayment plan in September 2010 and since then has worked to raise cash to pay back the government by selling parts of itself around the world.
In addition to the MetLife stock that was sold on Wednesday, the Treasury said US$3 billion in MetLife equity units were also sold.
The Treasury said the proceeds from that sale would stay in an escrow account and would be used over the next two years to pay down its preferred equity interests in the company.
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