AIG: Financial Winner (Update 2)

Updated with market close information.

NEW YORK ( TheStreet) -- American International Group ( AIG) was winner among large U.S. financials Wednesday, with shares pulling back from earlier highs to end with a gain of over 6%, closing at $22.37.

SNL Financial reported that AIG had completed the sale of its AIG Rail Services unit to Perella Weinberg Partners LP.

In an ironic twist, considering the extraordinary damage to the parent company's reputation in the wake of its massive bailout by the federal government in 2008, AIG subsidiary Chartis on Tuesday introduced a new insurance policy called ReputationGuard, to provide "innovative coverage to help policyholders cope with reputational threats."

The broad indexes rallied after European Commissioner Olli Rehn said the eurozone was nearing a consensus on plans to stabilize the region's sovereign debt crisis. Slovakia is the only eurozone member that hasn't yet approved a July 21 agreement to expand the European Financial Stability Facility, but is expected to approve the plan later this week.

In other insurance industry news, shares of Assured Guaranty ( AGO) rose 3% to close at $12.00, as investors shrugged-off the news that the city council in Harrisburg -- the Capital of Pennsylvania -- had voted to file Chapter 9 bankruptcy. Assured Guaranty had reported having "$165.0 million of net par exposure" on insured Harrisburg debt as of June 30, of which $93.1 million was considered below investment grade. The insurer also said it had paid $4.5 million in claims on the Harrisburg paper as of June 30, and expected to make a full recovery.

The banking sector also trimmed earlier gains, with the KBW Bank Index ( I:BKX) ending up with a gain of over 3% to close at 38.92, with all 24 index components rising 1% or more for the session.

Shares of Fifth Third Bancorp ( FITB) rose 5.5% to close at $11.51.

Regions Financial ( RF) was up over 5% to close at $3.82. Citigroup ( C) rose 5% to close at $29.22, following gains of 13% over the previous two trading sessions. The company will announced its third-quarter financial results on Monday. The consensus among analysts polled by FactSet is for the company to report third-quarter earnings of 84 cents a share.

Shares of Zions Bancorporation ( ZION) were also up 4.5% to close at $17.39.

Large banks seeing shares rise over 4% included PNC Financial Services Group ( PNC), which closed at $51.97, and U.S. Bancorp ( USB), closing at $24.75.

The consensus estimate among analysts is PNC to report third-quarter earnings of $1.50 a share, next Wednesday.

U.S. Bancorp reports next Thursday and analysts are expecting the Minneapolis lender to post third-quarter EPS of 61 cents.

Large U.S. banks seeing 3% on Wednesday included Bank of America ( BAC); closing at $6.58; Commerce Bancshares ( CBSH), at $38.56; Comerica ( CMA), at $26.51; Huntington Bancshares ( HBAN), at $5.42; JPMorgan Chase ( JPM), at $33.20; M&T Bank ( MTB), at $75.90; SunTrust ( STI), at $19.40; and Wells Fargo ( WFC), which closed at $26.95.

JPMorgan will kick-off bank earnings season Thursday, with analysts expecting the company to report third-quarter EPS of 96 cents, declining from second-quarter earnings of $1.27 a share.

Bank of America will announce its quarterly results on Tuesday, with analysts expecting the company to report third-quarter EPS of 28 cents.

Wells Fargo is scheduled to report its third-quarter results on Monday, with analysts expecting the company to report EPS of 72 cents.

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-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.