The Treasury Department may announce plans as early as this week to return American International Group Inc. to independence and recoup taxpayers' bailout money, according to three people with knowledge of the talks.
The biggest part of that strategy would be the Treasury's beginning to convert its $49 billion of preferred stock into common shares for sale by the first half of next year, said the people, who declined to be identified because the negotiations are private.
The timing of an announcement depends on the pace of talks between regulators and the New York-based insurer; discussions may extend beyond this week, the people said.
The government is seeking to dispose of its AIG stake as Chief Executive Officer Robert Benmosche, 66, prepares the divestitures of two non-U.S. divisions that he said would largely repay the company's Federal Reserve credit line.
MetLife Inc. said this month that its purchase of American Life Insurance Co., for about $15.5 billion, is "on track" to close Nov. 1. Also, AIG may hold an initial public offering of shares in another business, AIA Group Ltd., in October.
The insurer's objective is to "repay the taxpayers and position AIG, over time, as a strong, independent company worthy of investor confidence," said Mark Herr, a company spokesman. "We have been in discussions with the U.S. Treasury, the Federal Reserve Bank of New York and trustees of the AIG Trust over the terms of the government's exit from AIG."
The insurer and its government overseers are set to discuss terms of the exit strategy by Sept. 29 and may issue a statement after that meeting, said one person.
Mark Paustenbach, a Treasury spokesman, and Jack Gutt of the New York Fed declined to comment.