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Report: Taxpayers could profit from AIG bailout

The Associated Press

Shares of AIG fell 3 percent on Monday, despite a government report predicting that taxpayers could eventually make a profit on their bailout of the troubled insurance company.

On Sunday, the Treasury Department announced that it plans to sell another 164 million shares of AIG, for $30.50 per share — about 7 percent below Friday's closing price of $32.83. AIG committed to buy back $2 billion worth, about 66 million shares.

The Treasury Department currently owns about 70 percent of AIG. Stifel Nicolaus analysts estimated that the upcoming sale could reduce the government's stake to about 61 percent.

In a report released Monday, the Government Accountability Office said it could ultimately net $15 billion in profit on the AIG bailout.

This is the government's third sale of AIG shares. The two previous sales yielded about $12 billion, the Treasury said.

As of March, the government's stake in AIG was worth about $46.3 billion, down from its original commitment of $182 billion.

"We remain hopeful that taxpayers will ultimately recover every single dollar invested in the company, which is something few would have expected during the depths of the financial crisis," Tim Massad, the assistant secretary for financial stability, said in a statement Sunday.

The Stifel Nicolaus analysts, led by Meyer Shields, rated the stock a "Hold."

"We don't think investors will pay much more than $30 to $32 for the shares if they can buy them in that range from the Treasury," they wrote.

Shares closed at $31.84, down 99 cents.