It's been a week, but American International Group's ( AIG) investors just can't seem to shake the aftertaste of the insurer's reverse stock split.

Shares of AIG had plunged 16% to $13.64 by late afternoon trading.

Last week, shareholders at the company's annual meeting approved a 1-for-20 reverse stock split, meaning that those who held 1,000 shares of the company prior to the split owned 50 after it. Shares of AIG closed at $1.16 on June 30, which was equivalent to $23.20 assuming the reverse split. It has shed almost $10 of that price since then.

AIG split the stock after plunging more than 90% over the past year, arguing that a higher price may attract institutional investors who wouldn't typically buy shares that trade for less than $5.

But with AIG reporting last week that it could face additional losses from credit default swaps, that argument has seemed dubious at best.

The company is also in the process of shedding its assets to repay the massive $180 billion bailout from the government. Recently, for example, AIG said it would shed its Taiwan life insurance unit and consumer-finance operations in Russia.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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