AIG bailout: $42 billion to go

March 8, 2012, 4:19 AM UTC

AIG: Still government owned

Clarification: 3/8 8:40 AM.

The Treasury Department is selling $6 billion worth of its AIG stock at a profit. But it’s still not clear taxpayers will come out ahead on the insurer’s bailout.

FORTUNE — The good news: The government is about to get an another $14.5 billion of the money it poured into AIG (AIG) at the height of the financial crisis. The bad news: Uncle Sam is still owed $36 billion. And it’s not clear taxpayers will get it all back.

The new AIG repayments will come from two sources. First of all, the Treasury Department announced on Wednesday that it will sell $6 billion worth of its stock holdings of the insurance giant. Second, AIG agreed to repurchase the remaining $8.5 billion worth of preferred shares that the government received in the bailout of AIG, which at one point swelled to as much as $180 billion.

The sale comes at a good time for the government. AIG’s shares are up 26% this year to a recent $29.45. That means the government would make money on its AIG sale. The government paid roughly $28.50 for the majority of its AIG shares. The current offering would be for about 200 million shares, which means the government stands to make nearly $200 million. A success? Not quite.

Even after this offering the government still owns roughly 1.3 billion shares. Were it to try to cash out of those shares, AIG’s shares would likely fall below the Treasuries $28.50 break even point, probably a good deal below it. Worse, it seems the buyer with the most interest in AIG’s assets is AIG itself. The insurance company said it plans to buy $3 billion of the shares the government is selling in the offering. Last week, AIG said it rebought nearly $2 billion, or 10%, of the portfolio of bonds that the Federal Reserve had to take off company’s hands back in 2008.

What’s more, the Treasury has proceeded much slower in selling its AIG shares that it originally thought it would have to. Last year, when the Treasury Department filed its initial offering of AIG stock it originally said it would sell as much as $25 billion of its stake. That sale was eventually lowered to $8.7 billion. Even after the current sale, Treasury will only have cashed out of a little more than half of the shares it hoped to sell a year ago.

Clarification: An earlier version of this story said the Treasury’s remaining stake in AIG is $42 billion. That calculation is before the proposed $6 billion sale. After the sale, the Treasury’s stake in AIG will be $36 billion.