AIG shares up after lower loss but future uncertain

By Lilla Zuill

NEW YORK (Reuters) - Shares of American International Group rose above $2 for a second day on Friday, on signs Chief Executive Ed Liddy is making progress on stemming the financial bleeding at the insurer rescued by a massive government bailout.

AIG posted a net loss of $4.35 billion late on Thursday, its lowest loss in six quarters, bringing the total lost by the insurer over those periods to just shy of $109 billion.

Analysts said the better result showed Liddy was getting somewhere, but there was still a long road to travel to repay taxpayers.

Investors pushed AIG shares up as much as 15 cents to $2.10 on Friday, well above the all-time 33-cent low set on March 9, according to Reuters data.

"These results represent progress from recent past quarters," said John Hall, an analyst with Wachovia Capital Markets, in a research note.

Still, Liddy's task to sell assets to repay $85 billion in taxpayer debt is hampered by current credit market conditions, added Hall.

The U.S. government has stepped forward three times to help AIG stay afloat, committing some $180 billion in its efforts to rescue the insurer from huge mortgage-related losses. In exchange, the government has an 80 percent stake in AIG.

So far, AIG has reached deals to divest a dozen smaller businesses, raising a little more than $4 billion.