Government will be long-term shareholder in AIG: GreenbergPosted On: Nov. 11, 2011 12:00 AM CST
NEW YORK—The U.S. Treasury will be a shareholder in American International Group Inc. for a “very long time,” former AIG chairman and CEO Maurice R. Greenberg said Thursday.
The government took a major holding in AIG in 2008 to rescue it from near-collapse and it still owns a 77% stake in the New York insurer. The government has previously stated that it intends to sell its stake overtime.
“With that stock overhanging, it's difficult to see how they'll come out of government ownership for some time,” Mr. Greenberg said in a television interview on Bloomberg Television's "Street Smart."
“The decision should be to reduce ownership to something under 50%,” Mr. Greenberg added. “The stock would soar and the government would get its money back, but politically they'll never do that.”
The company has already repaid debt related to its 2008 bailout, in large part by last year selling off American Life Insurance Co. for $16.2 billion and raising about $17.8 billion by selling two-thirds of its shares in Asian life insurer AIA Group Ltd.
Despite having lost “many of the crown jewels,” AIG should be able to grow with the right leadership, said Mr. Greenberg, who is now chairman and CEO of C.V. Starr & Co. Inc.
AIG President and CEO Robert H. Benmosche “is doing as well as could be expected,” Mr. Greenberg said. “He's a decent guy, and I think he's trying. But his hands are tied behind him with the government.”
An AIG spokesman declined to comment on Mr. Greenberg's assertions about the company.
The government originally took a close to 79.9% stake in AIG in 2008. Its stake increased to 92% this year after AIG swapped the government's preferred shares for common stock. The government's stake fell to 77% in May after a stock sale.