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AIG shares hit fresh lows, threaten U.S. losses

By Ben Berkowitz

NEW YORK (Reuters) - Shares of bailed-out insurer American International Group <AIG.N> fell to their lowest levels in nearly eight months on Monday, potentially moving them into loss-making territory for the U.S. Treasury.

That marks a sharp reversal from the optimism of earlier this year, when the government thought it would be able to post a profit of tens of billions of dollars on AIG's record-breaking $182 billion bailout.

The Treasury holds 92.11 percent of AIG and has a break-even point of about $28.72 per share on the stock.

AIG shares, already under pressure this year, have been hurt in the last few days by reports of infighting between the government and bankers over where to price a secondary offering of some of the government's stock.

Even as AIG shares traded in the low $30s, some sources talked of an eventual pricing in the low-to-mid $20s.

Amid that chatter, the stock closed 3.3 percent lower at $29.70 on Monday, having touched its lowest adjusted point since September 23 early in the day.

Assuming the government were to sell the stock at a 3 percent discount to its closing price -- as researchers say the Treasury did with its shares in Citigroup <C.N> -- it would lose money on the sale.

The discount could be deeper than that, though.

A source familiar with the process said on Monday the government and company had begun a roadshow for an offering of shares expected later this month. The source said the offering would likely price at a discount in the mid-single digit range compared to the stock's last close.

In mid-January, the government stood to make a profit of more than $27 billion on its AIG stock, but the shares have lost more than a third of their value since.

Last Thursday, AIG reported a loss of more than $1 billion from continuing operations for the first quarter. The company will hold its annual shareholder meeting this Wednesday.

AIG has said it expects the government to have sold off its whole position by mid-2012.

(Reporting by Ben Berkowitz; editing by Gerald E. McCormick, Bernard Orr)