NEW YORK/WASHINGTON (Reuters) - American International Group Inc shares are expected to settle back to a level in the mid-$40 range once the company’s recently approved warrants begin trading, a person familiar with the situation said yesterday.But even at that level, the government would still be looking at a $27 billion paper profit on its investment, which it could begin to realise with public share offerings as soon as mid-May, the person said.AIG said last week its board approved the issue of warrants to purchase 75 million common shares, one of the last key milestones in its recapitalisation plan. A person familiar with the situation said last Friday the warrant issue meant the recapitalisation would close this week.The person who spoke yesterday, on condition of anonymity because he could not speak publicly, said the market had likely been anticipating the value of the warrants because AIG shares rose sharply over the last month.AIG shares closed at $57.39 yesterday. The stock is up 36 percent since December 8, when the the final version of the recapitalisation plan was agreed.The government rescued AIG from the brink of failure in September 2008. The company, once the world’s largest insurer, was bailed out to the tune of $182 billion by taxpayers. The recapitalisation, first agreed last September, is a complicated deal that involves repaying the Federal Reserve Bank of New York and concentrating the government’s stake in the hands of the U.S. Treasury Department. The Treasury will own 92.1 percent of AIG when the deal closes, a stake it intends to sell. The person who spoke last Friday said AIG was looking at a Treasury sale of a substantial stake as soon as March, although May was more likely.