AIG’s Shares Boosted by AIA Optimism

June 15, 2010

Shares of American International Group Inc rose 6 percent Monday, and one analyst said the stock may be getting a boost from optimism the bailed-out insurer would be able to monetize its Asian life unit and pay back taxpayers.

A $4 billion bid by Resolution to buy AXA’s British life insurance arm creates a sense that insurance deals are still hot, said Aite Group senior analyst Clark Troy.

That “might embolden AIG investors to think that AIA may fetch a good price yet,” Troy said, referring to AIG’s American International Assurance unit.

AIG is weighing options for the unit after a $35.5 billion deal to sell the business to Britain’s Prudential PLC fell apart. The divestment of AIA, which could include an IPO, is seen as a key step in AIG’s efforts to repay the government for its $182.3 billion bailout.

“The fact that the China AgBank and U.S. GM IPOs are rolling forward as if there had been no correction makes it feel like the AIA IPO is still feasible,” Troy added.

The Agricultural Bank of China is seeking to raise over $23 billion by listing in Hong Kong and Shanghai in what would be the world’s biggest IPO.

A source told Reuters on Friday that Morgan Stanley and JPMorgan Chase & Co were likely to be the lead underwriters in General Motors’ initial public offering, which could be $10 billion to $20 billion.

Troy also said AIG shares may be getting a boost from rival Lincoln National Corp’s plan to buy back close to a billion dollars worth of preferred stock it issued to the U.S. Treasury.

AIG’s shares were up 6 percent to $37.18 in late trading on the New York Stock Exchange.

(Reporting by Paritosh Bansal; Editing by Gary Hill)

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