INSTANT VIEW: AIG posts quarterly loss, to raise capital

NEW YORK (Reuters) - American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz) on Thursday posted a steeper-than-expected $7.8 billion net loss for the first quarter and said it planned to raise about $12.5 billion in capital to strengthen its balance sheet.

The world's largest insurer by market capitalization also said it was raising its dividend and replacing its chief financial officer.

+AIG shares fell 5.8 percent in after-hours trading.

The following is reaction from industry analysts and investors:

ANTON SCHUTZ, FOUNDER, MENDON CAPITAL, ROCHESTER, NEW

YORK:

"I'm assuming they've had conversations with rating agencies, and talked about what capital is necessary to maintain their credit ratings, so I think the capital raising is purely a reaction to that. They have triple-A ratings. They don't want to give that up. That's a holy grail.

"It will be important to see if they think they can recover some of the value of credit default swaps. This is a big down, I mean, they've written down what, $20 billion on these credit default swaps? Is there a point where they can write these back up again? It's a ton of capital coming back, if it comes back, and I think there's a good chance a lot of it will come back.

"Having a successful capital raise will be very helpful in terms of restoring some credibility, but they've recorded a couple of very tough quarters in a row now, so I think the eyes will be upon their ability to record a clean quarter sometime in the near future. We don't own shares, but I'm looking at buying some shares. There's a lot of value embedded in this franchise."