AIGshares surge on hopes that its bailout terms may be relaxed

AMERICAN International Group (AIG) shares closed up over 21 per cent yesterday on hopes that the terms of the insurer&rsquo;s government bailout may be eased after a proposal by former chief executive Hank Greenberg.<br /><br />Greenberg&rsquo;s plan would cut the US government&rsquo;s stake from 80 per cent, trim interest rates on AIG&rsquo;s lifeline government loan and extend the term of the loan, giving the company more time to repay it. <br /><br />Edolphus Towns, a Democrat who chairs the Government Reform Committee, has told his staff to take a look at the proposal to restructure its debt. <br /><br />A spokesman for Towns said he is considering whether the proposal would buy AIG enough time to allow it to avoid selling assets at fire-sale prices, which could improve the government&rsquo;s overall return on its bailout investment of more than $180bn (&pound;111bn).<br /><br />Greenberg built AIG over 38 years into the world&rsquo;s largest insurer before being forced to retire in 2005.<br /><br />&ldquo;AIG is open to constructive efforts by Greenberg or others that assist the company in restoring value to shareholders and repaying the taxpayer,&rdquo; the insurer said in a statement. The stock closed up $8.49 at $48.40.