The stock price of American International Group (AIG), the insurance company now 80 percent-owned by the U.S. government, has been on a roller coaster, shooting up to $56 a share last week before losing more than a third of its value again this week. Analysts cite the thin trading in the stock as one of the reasons for the big swings in price. Besides the large government shareholding, a reverse stock split earlier this summer has further reduced the number of shares available for trading. The appointment of former MetLife CEO Robert Benmosche has encouraged investors. His decision to put a stop to the “fire sale” of AIG assets also was bullish for the stock, because it held out hope that these assets would continue to produce profit or at least a higher sale price further down the road. Another factor supporting the AIG price, says James Frischling, president of advisory firm NewOak Capital, is Benmosche’s talk of having former AIG chief executive Maurice Greenberg become a regular advisor to the company. The 84-year-old Greenberg headed AIG for nearly 40 years, building it up into the world’s largest insurance group and 18th largest public company before being forced out in 2005 in connection with an accounting scandal.

Few understand the insurance business better and probably no one knows AIG as well as Greenberg. The losses that forced the government to step in and rescue AIG did not stem from its insurance business, which remains largely sound, but from a separate operation that traded in credit default swaps. Because the counterparties to these swaps included most major global banks, the government felt obliged to put up nearly $185 billion in aid to support AIG, receiving the ownership share in return. The recent drop in AIG’s share price has been part of a generalized selloff in financial stocks in what many analysts see as a correction to the sharp rise in the sector in August as the economic outlook improved. Benmosche, who had a reputation of being outspoken while at MetLife, has already caused some controversy as well. He began his tenure as CEO with a two-week vacation at his villa on the Adriatic, even giving interviews on the terrace overlooking the sea, and it emerged that his annual compensation is $10 million. He also criticized New York attorney general Andrew Cuomo as being “unbelievably wrong” for focusing on AIG’s controversial retention bonuses, saying that Cuomo “doesn’t belong in government.” The statements were viewed as impolitic and Benmosche subsequently expressed his regret for making them. Frischling remains encouraged, however, by the strength in AIG’s stock. “Seeing AIG’s stock have such a strong performance makes me hope there are even better days ahead for this recovering insurance giant,” he says.