AIG up on hopes a stronger company will emerge
NEW YORK (Reuters) - American International Group Inc (AIG.N) shares shot up on Tuesday after the new chief executive of the embattled insurer said he expected it to emerge from a federal bailout as a leaner, stronger company.
The stock was up 88 cents, or 18.6 percent, at $5.60 in morning New York Stock Exchange trade after rising as high as $5.70. But the shares are still down 90 percent this year.
Newly installed CEO Edward Liddy said in an interview on CNBC late Monday that he expected to move swiftly to sell parts of the company to repay an emergency bailout loan.
AIG, once the world's most valuable insurer, needs to raise cash quickly to repay an $85 billion U.S. Federal Reserve loan that allowed it to avoid bankruptcy after taking massive losses on mortgage derivatives.
If the loan is not repaid, the U.S. government has the right to take an almost 80 percent stake, heavily diluting investors' stock.
After the expected asset sales, AIG would focus on its traditional strengths in property-casualty insurance and its international business, especially in Asia, Liddy told CNBC.
"It will look a lot like it did prior to 1998, 1999, with less reliance on the financial services side," he said.
(Reporting by Lilla Zuill; Editing by Lisa Von Ahn)
