(Reuters) - A secondary offering for American International Group Inc shares by the U.S. Treasury Department was priced at $32.50 per share on Monday evening, according to an underwriting source.

The Treasury Department said on Sunday it would sell $18 billion worth of shares in the bailed-out insurer and set aside another $2.7 billion worth of shares to cover overallotments.

(Reporting by Olivia Oran; Editing by Gary Hill)