AIG initiates plan to exit US govt's stake

American International Group is in talks with the US government to speed up an exit plan designed to repay taxpayers in full while enabling the giant insurer to regain independence, says a media report.

Under the plan, which could commence as early as the first half of 2011, the US Treasury is likely to convert $49 billion of AIG's preferred shares into common shares a move that could bring the government's ownership stake in AIG to above 90 per cent, from the 79.8 per cent holding currently, The Wall Street Journal reported citing people familiar with the plan.

However, the common shares would then be gradually sold off to private investors, a move that would reduce US ownership and potentially earn the government a profit if the shares rise in value, it added.

"Our objectives remain the same: to repay taxpayers and position AIG over time as a strong, independent company worthy of investor confidence. She declined to provide details of the exit plan being discussed," the report quoted an AIG spokeswoman as saying.

Two years ago, the government rescued AIG from the brink of collapse by providing more than $180 billion in bailout funds.