AIG shares surge on word of talks with Greenberg

DES MOINES, Iowa_Shares of American International Group Inc. surged Thursday as analysts speculated the company might be reconciling with former CEO Maurice "Hank" Greenberg, who could help bring private capital and other business benefits to the company.

Shares were up $10.95, or 29 percent, to $48.64. They've traded between $6.60 and $493.60 in the past year.

More than 115 million shares were trading by early afternoon, nearly five times the 3-month average volume of 22.3 million shares.

Investor interest was fueled by the news that the company may be working to mend the strained relationship with Greenberg, who was forced out of the company in 2005 after an accounting scandal surfaced.

"It's not just that they're shaking hands with Greenberg, there's a real financial value in doing that," said Bill Bergman, senior stock analyst for Morningstar Inc. "Given the fact that AIG would have access to capital and business opportunities could be had, the reconciliation is meaningful."

A company spokeswoman did not immediately return a call seeking comment.

Early this month Greenberg agreed to pay a $15 million fine to settle fraud charges that alleged the company had engaged in deceptive accounting practices.

A statement released on his behalf said it was appropriate to put the matter behind him.

Greenberg, who built AIG over his 35-year career from a small company into the world's largest insurer, has been fighting AIG in court in an unrelated case over who controls an employee retirement fund.

A resolution in that case is expected by month's end with a judge's decision.

AIG was hit hard by the collapse of the home mortgage business. The insurance company had divisions that originated mortgages, insured them and was heavily invested in mortgaged backed securities and other instruments tied to mortgages, Bergman said.

The credit crisis sent AIG reeling and the U.S. government rescued the company from the brink of collapse with a loan bailout package worth up to $182.5 billion. The government now owns roughly 80 percent of the company.

AIG is shedding assets and cutting costs as it restructures.

Signs of improvement in the housing market generally in the past few months are positive for the company, Bergman said.

The stock was mostly flat in July, trading below $15 a share, but has surged upward this month nearly tripling in value.