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NEW YORK (

TheStreet

) --

American International Group

(AIG) - Get Report

has named former

MetLife

(MET) - Get Report

head Robert Benmosche as its new

chief executive

. The

Financial Times

is reporting that former

American Express

(AXP) - Get Report

gunslinger Harvey Golub is the frontrunner for the chairman post. Optimism about its

second-quarter profit

sent the stock up 62% yesterday.

All will be well then? Not exactly.

First off, even with the gain, the stock is worth just over $1 per share if you unwind the 20-for-1 reverse split that AIG completed last month.

AIG shares

are still down 36% in the past three months, making it the worst-performing insurer. Only 12 insurance companies have lost value during that period.

Secondly, should a profit be so surprising in a rising market? As stocks advance, so will AIG's investment portfolio. Don't forget that only three weeks ago, a

Citigroup

(C) - Get Report

analyst was suggesting there could be no equity left in AIG.

Thirdly, are you forgetting the $180 billion in government aid that hangs albatross-like around AIG's neck? The company owes that to you and me, the taxpayers.

Vice Chairman Paula Reynolds was hired in October to head up the restructuring of AIG, but she failed to sell key assets. The company scratched her off its list of potential CEOs, and now she's resigning.

In response to a

New York Times

(NYT) - Get Report

story, the National Association of Insurance Commissioners said state regulators have been "engaged in a virtually non-stop, coordinated, comprehensive review of AIG's U.S. insurance company subsidiaries." The

Times'

story questioned the stability of AIG's insurance subsidiaries, echoing a sentiment we've expressed here at TheStreet.com.

The NAIC says in a letter that its analysts are confident that AIG's subsidiaries will be able to meet their claims. The organization vowed to step in and protect policyholders if AIG couldn't meet its obligations.

On a positive note, based on the history of pre-earnings leaks there's no reason to question the possibility that AIG turned a profit in the second quarter. We will all know tomorrow when AIG reports its results.

The stock is showing a significantly smaller short ratio today. Perhaps the short sellers have been squeezed after yesterday's run-up. Once the short sellers bail out, the next direction could be down.

Contrarians might argue that at around 50% of book value, the price is right and it's time to buy. Be it on your own head.

-- Reported by Gavin Magor in Jupiter, Fla

.

Gavin Magor joined TheStreet.com Ratings in 2008, and is the senior analyst responsible for assigning financial strength ratings to health insurers and supporting other health care-related consumer products, including Medicare supplement insurance, long-term care insurance and elder care information. He conducts industry analysis in these areas. He has more than 20 years' international experience in credit risk management, commercial lending and analysis, working in the U.K., Sweden, Mexico, Brazil and the U.S. He holds a master's degree in business administration from The Open University in the U.K.