Several major businesses floundered in the wake of the global economic recession. Unable to recover in the early days of the economic downturn, many of these companies were allowed to fail. In the U.S., some of these companies received federal aid in the form of massive cash injections.
The American International Group, an American insurance corporation, was one such company. AIG, however, mishandled the funds in one way or another, leading the government to seize the company. Now, The U.S. Treasury Department is selling shares of the company in the effort to recoup its losses from the bailout.
The Treasury has had some difficulty finding buyers recently. Early litmus tests of market interest indicate that there is little interest in the firm now that it belongs to the federal government. The Treasury has priced each share of AIG at $29, allowing for a modest profit. Despite lukewarm interest from investors in the insurance industry, Time Massad, acting secretary of financial stability for the Treasury Department, is hopeful that the Department’s investment will be recovered in full.
The economic catastrophe of 2008 had a major impact on the worldwide insurance industry. Companies dealing in life and property insurance were among the most affected by the recession, with many failing outright. In an effort to keep the industry alive, the U.S. government focused their attention on major groups like SunAmerican and Chartis, injecting money into the companies so they could continue to operate.
While these companies have been frugal with the funds they received from the federal government, there are concerns that recovering these investments may never happen. So far, The Treasury has only been able to break even through selling shares of AIG.