AIG share sale to net US Treasury $18bn

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Image caption AIG is back in profit after taking a $182bn government bail out during the financial crisis

The US government has said it will sell a substantial portion of its remaining stake in insurer AIG, making it a minority shareholder for the first time since bailing out the group in 2008.

The Treasury will sell $18bn (£11.2bn) of stock, taking its stake in AIG down to about 20% from 53%.

AIG said it would buy back up to $5bn of the stock.

The government bailed out the insurer to the tune of $182bn during the height of the financial crisis.

If demand for the AIG stock is high, the government may sell a further $2.7bn of shares.

The company has sold off parts of the business to raise funds to repay the government, while the Treasury has made a number of share sales in the past two years.

The last sale, in August, raised more than $5bn, taking the total amount raised by selling AIG stock to more than $23bn.

The government is likely to make a profit on its investment in AIG, analysts say.

The insurer, once the world's largest, has returned to profitability, reporting a second-quarter profit of $2.3bn, 27% more than a year earlier and much higher than expected.

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