(Reuters) - Shares in 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.

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 fell 3.7 percent to $29.57 in morning trade. 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.

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 Treasury and the company are expected to sell billions of dollars in stock this month, as the company demonstrates an ability to raise capital and the government embarks on reducing its stake. 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)

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