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AIG Deals a Step in the Right Direction

If the Treasury wants to tap the market for reimbursement, the outlook isn't much better. AIG's current market cap stands at under $3.8 billion, and it owes 12 times that much, not including fees, or what it will cost to extinguish an open credit line. It makes the massive conversion of the Treasury's preferred Citigroup (C) stake into common stock look like chump change.

AIG has undeniably come a long, long way from where it was at the height of its bailout -- $180 billion in committed funds, or $134 billion in dispersed funds, depending on the math used. Its accomplishments under the new CEO Robert Benmosche are remarkable, when one considers the huge debt burden and operational difficulties AIG was facing when he took the helm.

"This sale is an important step toward repaying the government," AIG Chairman Harvey Golub said in a statement on Monday, later adding that both the AIA and Alico divestitures "give AIG greater flexibility to move forward with our restructuring and rebuilding efforts, and focus on enhancing the value of our key insurance businesses."

But implicit in such statements is what's left out as well. AIG executives have made extensive comments in support of employees, and defending their compensation. They have outlined immediate plans to start repaying the government, with gratitude to taxpayers. But there's no timeline or strategy for complete independence, and no mention of shareholder returns, which don't appear to be on the near-term horizon from management's perspective.

The stock, which was down about 6.3% year-to-date based on Friday's close, was looking strong ahead of the opening bell, quoted at $29.47, up 4.9%.

-- Written by Lauren Tara LaCapra in New York

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