Treasury Selling All of Its Remaining AIG Common Stock

By Rick Rothacker and Rachelle Younglai | December 10, 2012

  • December 11, 2012 at 8:42 am
    Cheetoh Mulligan says:
    Hot debate. What do you think?
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    BENMOSCHE for President!!!!
    And thanks to President Bush for making this profitable business deal.

  • December 11, 2012 at 9:19 am
    Baxtor says:
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    Was it really a profit? For a dollar per dollar transaction, it may have been, but what about the President’s fee, congress, the treasury, etc… for having to deal with all this prior to, during, and post bailout? This cost us vs the government making a profit. It’s just a one sided story, but not the whole story. Thanks for another worthless article.

    • December 11, 2012 at 9:29 am
      Cheetoh Mulligan says:
      Hot debate. What do you think?
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      Don’t rain on the parade. Those people get paid anyway, so at least we got a little meaningful work out of them. Yes there is the lost cost of the money, but interest rates are minute.
      Yea for Benmosche!

  • December 11, 2012 at 9:37 am
    Agent says:
    Well-loved. Like or Dislike:
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    How is this going to benefit the taxpayers who bailed this sorry company out? Will our tax rates go down as a result? I think not and we are scheduled to get another round of tax increases starting 1-1-13. Turbo Tax Tim will be flush with money from the sale. I am sure he can find a good use for it. With the way Citigroup is going (11,000 layoffs), he may have to bail them out again.

  • December 11, 2012 at 10:39 am
    Peter Polstein says:
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    This is pure baloney. I want to see a forensic audit of the 182.5 billion paid to AIG in the so called “bailout” Go back over all of the “sale” numbers and they aren’t anywhere near the total provided by the Government through the five different deals since January 2009. Further, the sale of all of the so called “darlings” of this entity have been devoid of the pricing that was alleged to be in play, starting with ALICO, AIA and not ILFC whose initial pricing was in the vicinity of 11 billion and now if sold to the Chinese some 4.5 billion. Then there was the 1 – 20 reverse split that kept their shares from being delisted by the Big Board in January of 2009. This is nothing more than an additional smoke and mirrors caper by both parties. Be well all and enjoy the holidays. Pete

    • December 11, 2012 at 11:51 am
      Agent says:
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      I agree with you Peter. I would like to see an audit where the $182 Billion has all been paid back with interest. I believe this like I believe the phony employment numbers we get all the time from the Labor Dept. It is just another of the series of lies we get all the time from this leftist administration.

  • December 11, 2012 at 12:17 pm
    Phoenix says:
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    You want to see an audit. That’s funny. It just kills some agents (who probably couldn’t pass the smell test to rep AIG) that AIG is a success. Sour grapes.

  • December 11, 2012 at 1:23 pm
    Peter Polstein says:
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    Phoenix – first of all I’m not an agent,secondly as SVP of Alexander & Alexander nee AON and having done personal business on a face to face basis with the most senior management of AIG including Hank, don’t start in the success BS of AIG. If you did an full actuarial study of this entity and closely monitored their reserves and reserving practices as well as their internal reinsurance dealings, you would talk in different terms. In writing in September 2007 I called their demise, the response was interesting. In mid 2008 I wrote that it was likely that AIG shares would be at $10, I was wrong they tanked under $ 5 and then fell under $ 1, which triggered the so called “bailout” Don’t ever believe the baloney that the “world ” financial marketplace would have collapsed. Sure more than two dozen banks would have taken a real haircut, so ? In other words, risk is a word that defies logic. The fact that they had 7% of the worlds insurance was defined as a catastrophic occurrence, please! The world’s capacity would have eaten up AIG’s overall position, albeit, at different terms and conditions, but a catastrophic occurrence ? So my friend before you start to punch lights out, be wise to find out whose lights you’re attempting to rock. I’m retired but still consult on off shore reinsurance. OK? Be well Pete

    • December 11, 2012 at 2:26 pm
      Agent says:
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      Good one Peter. Nice to see a very intelligent post instead of the idiot posts of nice job Benmosche. This company has been nasty for a long time with their bid rigging fiasco with Marsh, their reserving policies they have been caught at and paying bonuses to executives in the financial services dept that got them in trouble to start with. Now, the government is trumpeting they made a profit on all this. That is reason enough to ask for a thorough CPA audit of all the transactions.

    • December 11, 2012 at 3:11 pm
      Libby says:
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      Peter – you are correct about this “deal” with AIG. They have never held up to their end of any bargain if they could get out of it; including claim payments. They are the biggest bunch of sleaze buckets around. They should have gone belly up.

  • December 11, 2012 at 1:46 pm
    Bill says:
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    Hidden due to low comment rating. Click here to see.

    • December 11, 2012 at 3:12 pm
      Libby says:
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      Gee, thanks Bush. More abuse from AIG. Just what we all need.

  • December 11, 2012 at 3:49 pm
    Peter Polstein says:
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    Libby & Agent – by the way they never paid one nickel of interest throughout the entire time that they were ostensibly under Government control. You may recall that it started at 5.5% + Libor and eventually was reduced as I recall to a flat 5%. As best I can find, all of their “sales” such as they were, including the idiotic sale of over 600 million shares of common, which was a diluted issue in excess of the 400 million (odd) issued never went at the “strike” price, nor did the partial sale of AIA, never hit 100 billion. So the question remains
    who is going to own up on this deal, certainly not this administration.

    Be well all. Pete

    • December 11, 2012 at 3:54 pm
      Agent says:
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      To add to insult, they managed to keep their Best ratings of A when they had been bailed out to the tune of $182 Billion. What other company with this much financial angst would have kept their Best Rating? I question Best on their assessment of this group of companies.

  • December 11, 2012 at 4:20 pm
    D says:
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    This was never a “bailout”. Those who call it a bailout are being naive. Google “treasury rights” and you will understand. This is how the Fed handled, Chrystler (in the Iaccoca days), GM, the banks…it’s more generous financing than a bailout. Be educated instead of mistakenley reactionary.

    • December 11, 2012 at 4:34 pm
      Agent says:
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      D, what is it called when taxpayer money is extended to a company to keep it from going under? We have a pretty good idea on why AIG was saved since they were handling the Pension Plan for Congress. No wonder they were too big to fail. We couldn’t possibly have all that money at risk to vanish into thin air.

      • December 11, 2012 at 5:33 pm
        D says:
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        A bailout is when you go, “Here is some cash. I don’t need it back. See you later”. That’s not even close to what happened. There was an expectation that the stock would rise and the Fed would be able to cash out at a profit. That’s how it works when the Fed steps in (Chrystler, GM, US banks etc.) The ulterior motive in the AIG deal was to prevent default on AIG payments to Goldman-Sachs. Henry Paulson (ex G.S President engineered this deal). My comments are neither for or against what was done here. I am only saying, it was not a bailout.

  • December 11, 2012 at 10:25 pm
    Reality Check says:
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    Pete – I’m going to start by saying you may be correct. However until you have actual facts, your comments hold no validity. If you want to hire forensic accountants and review all the transactions, go for it. It just seems like you have a bone to pick with AIG. Or maybe you’re coming up with an excuse because you said the company would never be able to pay the money back. Also I think you said the company wouldn’t make it altogether.

    Again I’m not saying you’re wrong but there is a equal chance the money was actually paid back.

    Be well.

  • December 12, 2012 at 2:42 pm
    nomesaneman says:
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    What was the actual interest paid on the loans? Good point, Peter.

    The Fed lent money at a 7.9% interest rate and the Treasury at about 3%. So, about 5% overall, depending on how one slices/dices info. http://projects.propublica.org/bailout/entities/8-aig

    One could argue that a 5% loan rate is certainly not “market price” for an essentially bankrupt entity, even if the loans were secured with AIG assets. Banks paid a lot more in TARP intetest rates, but those wer different loans.

    As to “IF” the money was actually repaid – I think there is enough evidence out there to say they were. There are a number of websites in addition to propublica that track the bailouts. the AIG website also has a fairly comprehensive timeline of all the transactions that took place. Peter’s right in that AIG did not sell off anywhere near enough assets to pay the loan, but some of the “toxic” assets did better in a “mark to market” rebound and were able to be sold off at profit.

    Bottom line is that I believe the money was repaid, plus a little more. Even though one can argue that the cost of capital spent on AIG deserved a better return than 5%, I’m just glad that the money came back.

    Also, remember that the money only “ran through” AIG to the counterparties that were piad 100%. Some of them were already TARP recipients(in billions):
    Societe Generale-$4.1; Deutsche Bank-2.6, Goldman Sachs-2.5, Merrill Lynch-1.8; Calyon-1.1; Barclays-$0.9; UBS-0.8; DZ Bank-
    0.7; Wachovia-0.7; Rabobank-0.5; KFW-0.5; JPMorgan-0.4; Banco Santander-0.3;Danske-0.2; Reconstruction Finance Corp-0.2; HSBC Bank-0.2; Morgan Stanley-0.2; Bank of America-0.2; Bank of Montreal
    0.2.

    AIG is no longer the company it was in 2008, but the hard feelings seem destined to remain with a lot of us for a long time.

    • December 12, 2012 at 2:44 pm
      Libby says:
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      I had hard feelings before the bailout…

      • December 12, 2012 at 4:28 pm
        nomesaneman says:
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        That’s what I meant. It was disliked as “The Evil Empire” long before 2008. I’m just saying it’s no longer the empire it once was, and will never be again.

        As to the evil part, well in my opinion, that remains to be seen though AIG is no doubt still part of (what we used to call in the 60′s) “The Man”.

    • December 12, 2012 at 3:44 pm
      Agent says:
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      AIG messed in their own kit. Their employees put the company at risk of failing and then the Fed rescued them because they were too big to fail. I will not be a fan of AIG as long as I have breath. They are proven crooks and they have been salvaged by a tax cheat, Timothy Turbo Tax Geightner.

  • December 12, 2012 at 4:23 pm
    Insurance 102 says:
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    While AIG and its public relations team champion the “profit” that the company made the Treasury, let us look at the facts:

    1) Pete Polstein is correct in that AIG/Chartis divested itself of its most lucrative assets (HSB, Transatlantic Re, etc) at garage sale prices. How is the company going forward going to be attractive when it no longer has some of its most valued business units?

    2) Some of the most talented AIG employees have exited the company and are now working with other enterprises. How does the company launch a turnaround without these former employees?

    3) The company as documented in a recent issue of Business Insurance as now being a much more conventional insurance company. It has lost the creativity that it previously had to offer creative solutions that meet a client’s insurance and risk management needs that allowed it to differentiate themselves from their competitors. How does the company plan to distinguish itself going forward?

    4) If one looks at AIG’s financials, the company is still a mess. The beta (volatility of the company) is 3.44. A beta of slightly under or over 1 is considered to be normal. As the number gets larger, it indicates the company becomes more financially risky. With a beta that is well over 3, the company could be on slippery financial footing in the future.
    The beta of some of their competitors such as Traveler’s (.69) and Chubb (.49) show that these are MUCH LESS financially volatile companies.
    I believe that this uncertainty is reflected in the company’s stock price. When the reverse 1:20 stock split is factored in, the stock price has risen from $1.00 to around $1.75 in approximately three years. This is not a great return on investment by any means!

    • December 12, 2012 at 5:09 pm
      Agent says:
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      Hey Insurance 102, you are blowing me away with the facts. Looking at the financial results, AIG just looks like riverboat gamblers whose luck ran out. They thought they were so big, they could get away with anything. It is a pretty stark contrast between them and Travelers or Chubb. I still have something stuck in my craw. The bad paper funded by the government bailed out several foreign banks who by greed or ignorance got caught up in this scam. Deutsche Bank, Bank of Scotland, the criminal bank HSBC among others. What a travesty visited upon the taxpayers of this great country.

  • December 17, 2012 at 11:31 am
    Celtica says:
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    After reading all these comments, all I can say is that Bush bought low and Obama sold high. Isn’t that the way it it supposed to work?

    • December 17, 2012 at 11:33 am
      Libby says:
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      I wouldn’t know. I always end up buying high and selling low. Sigh. Alas, I guess I lack the Midas touch.

      • December 17, 2012 at 1:02 pm
        Agent says:
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        If you were like our politicians, you would have the inside scoop and could make a killing in the market.

        • December 17, 2012 at 1:05 pm
          Libby says:
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          LOL! You’re right. I just read that my old boss, Michael Van Gilder, was indicted on a boatload of insider trading charges. The evidence looks pretty strong and it’s not looking too good for him. He’s gonna get the “inside scoop” if you know what I mean.

          • December 17, 2012 at 3:21 pm
            Agent says:
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            Maybe he will get lucky and get put in a cell with Tyrone. He may learn the meaning of “kid”. Nancy Pelosi and her friends have made millions on insider trading for years and should be behind bars. I wonder if they dispense Botox in prison.

          • December 17, 2012 at 3:28 pm
            Libby says:
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            Don’t know about botox. She might look better without it!



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