AIG, the giant global insurance company bailed out by taxpayers during the heat of a financial crisis, still owes the United States government over $100 billion. Part of the bail-out agreement involved the government receiving preferred shares in the company, becoming a significant owner.
According to the news today, the company wants to start paying back this remaining balance next year. At the same time, the government will reduce its ownership in the country. Preferred shares will be converted to common shares which can then be sold on the open market, a process that will apparently increase the government’s stake in the company for a short time.
AIG has been paying back the government for some time already, selling off non-core businesses and other assets to raise the cash.
If the price per share of AIG common stock increases throughout the year, the government could make a profit on the investment in the company. If you’re going to buy shares of AIG, it might be a good idea to get in now before the government starts looking for buyers. I don’t own any AIG stock right now, but I might buy some soon.
Updated February 10, 2011 and originally published September 29, 2010. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.