$10-$15 Billion AIG Stock Offering in Works

A $10 to $15 billion secondary stock offering of American International Group is being planned for March or April of 2011 by the Treasury Department, a person familiar with the matter told CNBC.

The offering is technically a secondary offering because a portion of AIG shares trade publicly. However, this secondary offering is aimed at reducing the government's huge stake in the insurer and would significantly increase the number of AIG shares on the market.

Citi and Bank of America, who have been advising AIG on its strategic options, may have the early lead as underwriters, people familiar with the matter said. Fees may be determined by the end of the year, but will likely remain low, according to these people.

Fees for the December Citigroup offering and the November General Motors IPO were both below 2 percent on the common offerings, historically low by Wall Street standards.

In addition, the board of AIG is developing a succession plan for its cancer-stricken CEO, Bob Benmosche, which is needed for AIG's roadshow when the company markets the offering, say the people familiar with the matter.

In October AIG said its Chairman Steve Miller would serve as interim chief executive if Benmosche steps down.

AIG received a $182.3 billion taxpayer-funded aid package during the financial crisis. The Treasury currently owns almost 92 percent of the company.

Earlier this month there was speculation that an offering would come after a recapitalization plan, which simplifies the bailout structure and accelerates payback schedule, closes by the end of the first quarter.

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