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NEW YORK — Amid its ongoing restructuring and management shuffle, American International Group Inc. is about to provide some insight into how much it has recovered since it almost collapsed a year ago.
The insurer, which is now 80 percent owned by the government, reports its second-quarter results Friday. It has been working toward repaying government loans by selling assets and preparing to spin off others. Analysts say progress on those efforts as well as the insurer's ability to retain or attract customers for its insurance units will be the keys to whether the quarter is considered a relative success.
The company took another step toward its recovery Thursday, naming former American Express Co. Chairman and CEO Harvey Golub as its non-executive chairman, replacing retiring Edward M. Liddy. Golub, 70, was elected to the AIG board in May. He headed American Express from 1993 to 2001.
Golub's appointment was announced three days after AIG said former MetLife Inc. Chairman and CEO Robert Benmosche will take over as president and CEO from Liddy.
If AIG's recent share price surge is any indication, investors are becoming more optimistic that the company is finally beginning to find its footing. AIG jumped 53 cents, or 2.4 percent, to $22.53 after rising more than 60 percent on Wednesday.
Analysts, however, aren't about to get ahead of themselves.
"Things are getting better, it's just hard to know from what stance," said Bill Bergman, senior stock analyst at Morningstar Inc. in Chicago.
Standard & Poor's equity analyst Cathy Seifert said some of the share price gains could be from investors trying to cover short sales in case results are somewhat upbeat. A short sale is when an investor borrows a share of stock, sells it and then tries to buy it back at a lower price to make a profit.
The government provided AIG with an $85 billion rescue package amid the growing credit crisis last fall. Since then, the government has provided additional rounds of support. AIG's available loan package now totals $182.5 billion, though it has not tapped all the funds.
Liddy's departure was first announced in May and at the time it was also announced the CEO and chairman roles would be split, similar to what many financial firms have done over the past year. The former CEO of Allstate Corp., Liddy has served as chairman and CEO of AIG since the government rescued the insurer in September.
Golub and Benmosche will be stepping into a company in an unprecedented state of flux. AIG is trying to shed assets, spin off subsidiaries and raise money to help repay the government.
AIG is planning to spin off at least three of its major subsidiaries — its property casualty and general insurance business as well as two life insurance units. The government is receiving preferred stakes in each of the life insurance units as part of AIG's loan repayment.
Although AIG could retain majority stakes in each of the spinoffs, separating the units allows them to create different management teams to operate the firms.
The spinoffs allow AIG to separate the still-performing businesses from a parent company whose brand is likely hindering business.
"It's very important that these companies are able to insulate themselves from AIG's taint," S&P's Seifert said. "It's the only way to hold onto franchise value."
Aside from the spinoffs, AIG has sold dozens of assets since December as part of its cash-raising efforts.
AIG's near-failure was not because of its basic insurance operations that it is now shedding, but instead by its foray into risky derivatives and other investments that helped cause the credit crisis.
Losses in the financial products division that wrote those contracts have likely continued to pile up. One of the problems still facing AIG is uncertainty surrounding that unit.
"It's so hard to know what those losses were in the first place," Morningstar's Bergman said. "We don't know the extent of the losses that are still there on the derivitatives books."
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AP Business Writer Ieva M. Augstums in Charlotte, N.C. contributed to this report.
