American International Group Inc. is selling a cornerstone of its business, Asia-based life insurer AIA Group, in a government-approved $35.5 billion deal. The sale to British insurer Prudential PLC could reduce by nearly one-fifth the amount of federal bailout money still invested in struggling AIG.
But officials and analysts say it's not clear whether taxpayers will eventually recoup all the money AIG drew from a $182.5 billion rescue package the government committed to at the height of the 2008 credit crisis. In return for that package, the government got a nearly 80 percent stake in the insurer.
Read the last paragraph again if you're one of those folks who bought AIG stock in the pennies thinking it was a sure thing. Profit margins and operating margins continue to be negative. The company continues to lose money, so any future asset sales are a race against wasting assets. The longer it takes to sell off the next chunk, the less the whole firm will be worth. The firm is worth about $52B once liabilities are netted out, so even if the firm's remaining assets are sold at a premium the taxpayer will still lose about $130B from the rescue package.
Nota bene; Anthony J. Alfidi has no position in AIG at this time, thankfully.
