NEW YORK (Bloomberg) American International Group Inc fell to the lowest since August as investors bet that losses at the company’s largest unit will discourage buyers of the stock in future government offerings.AIG dropped $1.18, or four percent, to $28.28 in New York Stock Exchange composite trading yesterday. The US Treasury Department disposed of 200 million shares on Tuesday at $29 each. AIG sold 100 million shares, raising $2.9 billion, according to a statement from the company. The transactions leave the government with a 77 percent stake.Reserve shortfalls and claims from the Japan earthquake fuelled losses at AIG’s Chartis property-casualty business. Chief executive officer Robert Benmosche in March named Peter Hancock to run the operation, replacing Kristian Moor who was denied his full target bonus after missing financial goals.“This is a high-risk proposition,” said Cathy Seifert, an equity analyst at Standard & Poor’s, told Matt Miller on Bloomberg Television’s “InsideTrack” yesterday. “They need to improve some of the operating fundamentals and show their new shareholder base and their old shareholder base” that they are on the mend. She said the shares are undervalued compared with competitors’ stocks.The Treasury plans subsequent sales to exit its AIG holding as it seeks to recover a $47.5 billion investment. The process may take 18 months to two years, according to a person familiar with the matter, who declined to be identified because the discussions were private. The department needs an average price on all sales of about $28.73 to break even. The Treasury had a 92 percent stake before the offering.AIG set the record straight yesterday on its pitch to investors, telling regulators that the Government Accountability Office and Office of the Special Inspector General for the Troubled Asset Relief Programme hadn’t reviewed its insurance reserves. AIG called its statement a “clarification” of information it provided to prospective stock buyers.Chartis accounted for about half of the company’s revenue last year and that share is poised to rise after Benmosche sold non-US life insurance operations and a consumer lender. AIG has plunged 41 percent this year, the biggest decline in the Standard & Poor’s 500 Index.“The earnings power of the company has been weakened,” Cliff Gallant, an analyst with KBW Inc., told Betty Liu on Bloomberg Television’s “In The Loop.” He rates the company “underperform”.