U.S. Sells $4.5 Billion in AIG Shares

NEW YORK (TheStreet) -- The U.S. Treasury on Friday announced a public offering of $4.5 billion in government-held shares of American International Group , with the insurer quickly announcing it would buy back the majority of the stock.

AIG's shares were up 1% in afternoon trading, to $31.16, after the insurer said it would purchase $3 billion in stock sold by the Treasury at the offering price.

Subsidiaries of Citigroup , Deutsche Bank , Goldman Sachs and JPMorgan Chase were retained as joint bookrunners for the offering, and the underwriters were granted a 30-day option to purchase up to $675 million in additional shares from the Treasury.

This marks the Treasury's third offering of AIG shares this year. The first offering was for $6 billion worth of shares in March, with AIG buying roughly $3 billion in shares at the offering price of $29.00. The second offering was in May, for $5.7 billion, with AIG purchasing about $2 billion worth of shares, at a price of $30.50.

AIG reported that the Treasury held 61% of the company's common shares, after the May offering was completed.

AIG on Thursday reported second-quarter after-tax operating income of $1.9 billion, or $1.06 a share, which included a $1.3 billion fair value adjustment on the company's holdings in Maiden Lane III. A major highlight for the company's core operating results was a 26% year-over-year increase in insurance income, to $1.9 billion, after tax.

Goldman Sachs analyst Michael Nannizzi reiterated his "Buy" rating for the company's shares, with a $40 price target, and said that although AIG reported core earnings of 80 cents a share, his firm saw an "in line quarter," with operating earnings of 67 cents a share, which matched Goldman's estimate, after adjusting an unexpected $434 million in "earnings out of the Direct investment Book," and $118 million in real estate gains.

AIG's shares closed at $30.84 Thursday, returning 33% year-to-date.

AIG data by YCharts

The shares traded for nine times the consensus 2013 EPS estimate of $3.30. The consensus 2012 EPS estimate is $3.76.

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-- Written by Philip van Doorn in Jupiter, Fla.

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