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Aig Stock

Aig Stock

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(Updates with comment from CEO Liddy, in second paragraph, and new share price.) By Lavonne Kuykendall Of DOW JONES NEWSWIRES CHICAGO -(Dow Jones)- At American International Group's (AIG) annual meeting in New York, Chief Executive Edward M.

Liddy touted the company's progress on repaying government assistance and proclaimed that the company had lowered risks in its derivatives business, despite a recent disclosure that it could face new, unrealized losses.

AIG now has an "excellent chance" of repaying its debt to the government as it unwinds its businesses in the coming months, Liddy said.

He didn't, however, offer any promises of a recovery in AIG's stock price to shareholders seeking assurances.

A slate of 11 nominees for directors were elected to a one-year term at the meeting, including six newcomers who were solicited by the U.S.


Shareholders also voted to approve a proposal for a reverse stock split of AIG's outstanding common stock at a ratio of one for 20.

Liddy talked about strides company has made in settling its government debt of $40 billion, which is part of the $182.5 billion in federal assistance authorized for AIG since the company's first bailout in September, according to figures provided by the Government Accountability Office.

The U.S.

government now has an 80% stake in AIG.

AIG's biggest deal to date is its agreement to trade a portion of its foreign life insurance operations to the New York Fed in return for reducing its $40 billion government debt by $25 billion.

The decision to place the foreign life insurance businesses into special purpose vehicles to prepare for an initial public offering would pay off in time, he said.

"It allows the marketplace time to recover," Liddy said.

"We have a better option to receive a higher value." Analysts have said that the life insurance businesses could eventually bring a far higher value than in the current depressed market.

"We have determined the destinies of nine of our major businesses," Liddy said.

"AIG is far more stable than it was a few months ago." As to one of its businesses that is on the block, International Lease Finance Corp., Liddy said AIG is "still deciding what to do with it." Despite having a " fabulous business run by a fabulous management team," the company has a lot of leverage.

And in the current market "leverage is not a good thing," Liddy said.

Liddy said AIG had also made progress at reducing risk in its derivatives business, which brought the company down, and he said the outstanding value of its derivatives has been cut almost in half, to $1.4 trillion from $2.7 trillion last year.

Shares of AIG sank Tuesday after the company reported that it could face unrealized losses in its portfolio of credit default swaps contracts written to provide regulatory capital relief to EU banks, if credit markets continue to deteriorate.

Shares of AIG recently traded down 14.3% at $1.14.

During the question-and-answer session, one shareholder said that much of her retirement savings were invested in AIG stock and she asked Liddy if he saw any "hope" for the company to regain its former strength and share price.

"I am such a bad stock picker," Liddy said, suggesting she find an investment adviser.

She pressed him, asking, "You don't know if there is a realistic chance for a significant recovery?" He deflected her question.

"It is not a black-and-white answer," he said, suggesting that some stocks might recover more or less quickly than AIG's share price, which has fallen more than 95% in the last 12 months.

-By Lavonne Kuykendall, Dow Jones Newswires; (312) 750 4141; [email protected] (Liam Pleven of the Wall Street Journal contributed to this report.) (END) Dow Jones Newswires 06-30-09 1555ET Copyright (c) 2009 Dow Jones & Company, Inc.

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