US claws back $18bn from bailout with AIG share sale

The United States government is offering for sale $18bn (£11.2bn) of shares in insurer American International Group, in a move that would take its holding below a majority stake for the first time since the $182bn bailout in 2008.

The sale is the latest step to recover taxpayers' money spent on the largest bailout of the financial crisis.

AIG said last night that the Treasury was selling $18bn of its shares to institutional investors.

If there is greater demand, it will grant the underwriters a 30-day option to buy up to $2.7bn more of its stake in the company.

AIG said it would buy back $5bn of shares itself. In total, that could reduce the government's stake in AIG to 23 per cent against its current 53 per cent which is worth about $30bn.

The government has cut its stake from 92 per cent, selling shares four times in the past two years and raising $23.3bn.

AIG received the biggest of the Wall Street bailout packages after suffering massive losses from investments in derivatives.

The insurer has been profitable for the past two years and is expected to post an after-tax profit of $7.4bn in 2012. Chief executive Robert Benmosche said last month the company was close to its goal of repaying the government everything it owed "plus a profit".

AIG executives, among them chief executive Bob Benmosche, have said they expect the government to be out of the insurer by 2013. Mr Benmosche, who has been fighting cancer while running the company, is widely credited with a turnaround saving AIG from a fire sale of assets.