Shares of insurance giant American International Group soared more than 50 percent last week and they now look overpriced, Barron's said in its August 31 edition.

The bailed-out insurer's shares climbed to $50.23 on Friday, their highest level since a 1-for-20 reverse stock split on July 1, but AIG's obligations to the U.S. government and the challenges of selling -- or maintaining -- its various operations still loom large, the newspaper said.

AIG faces difficulties in selling its overseas life-insurance units and reviving its core property-casualty insurance businesses, Barron's said.

The company, which reported a second-quarter profit, is difficult to assess since there are few analysts covering it and its finances are complex but, according to Barron's, AIG has negative tangible common shareholder equity.

Investors interested in the company would be better off buying its debt rather than its common shares, the newspaper said.

The rise last week in part reflected hopes former Chief Executive Hank Greenberg may have a larger role at the company, Barron's said.

AIG's new chief executive, Robert Benmosche, told Reuters in an interview that he had turned to Greenberg for help and support and has been in regular contact with him.

A short squeeze in AIG's shares also contributed to the rally last week, as well as optimism that rising markets would help the insurer's large investment portfolio, Barron's said.

(Reporting by Elinor Comlay, Editing by Maureen Bavdek)

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