AIG Rallies After Backing Off Chartis IPO

Shares of AIG were gaining ground Tuesday as investors opted for a positive interpretation of the company's decision to back off an IPO of its Chartis unit.
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NEW YORK (

TheStreet

) --

AIG

(AIG) - Get Report

shares jumped Tuesday following

media reports

that the company has dropped plans for an initial public offering of its Chartis property casualty division.

The stock was gaining nearly 11% to $31.13 in recent trades. The high for the session is $31.94. Volume was a brisk 20.4 million, closing in on the issue's trailing three-month average daily churn of 24.4 million.

In backing away from the planned IPO, AIG CEO Robert Benmosche told employees that he considers Chartis to be a core business,

Bloomberg News reported Tuesday

, citing two unidentified sources.

AIG is the largest recipient of federal bailout money in the financial crisis,

owing the government $70 billion, according to ProPublica

.

Bloomberg

puts the size of the AIG bailout at $182 billion. In any case, the government owns about 80% of the company, and many followers of AIG have suggested the United States will do far better on its investment if the company takes its time selling assets, allowing markets to recover.

That has been the strategy of Benmosche, who has put off at least two planned asset sales since taking over leadership of AIG in August,

Bloomberg

reports.

There is reason to believe the move makes sense in the case of Chartis.

Many followers of property and casualty stocks believe they are undervalued

, suggesting doing an IPO now would fetch AIG less than the unit might be worth a year or two down the line.

The AIG surge took place with other large financials mixed in Tuesday's session.

Bank of America

(BAC) - Get Report

was up slightly while

Wells Fargo

(WFC) - Get Report

and

Citigroup

(C) - Get Report

were both down about 1.5%.

The Financial Sector Sector SPDR

(XLF) - Get Report

ETF was roughly flat.

--

Written by Dan Freed in New York

.

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