NEW YORK (Bloomberg) - American International Group Inc., the world's largest insurer, had its biggest gain in two years of after Wachovia Corp. analyst John Hall said the company is worth 23 percent more than Tuesday's closing price.

Shares of New York-based AIG rose $2.86, or 5.3 percent, to $57.35 in New York Stock Exchange Composite trading, its biggest gain since June 2005. The stock reached $57.89 earlier in the session. The combined value of AIG's business units is $67 a share, Mr. Hall wrote on Tuesday after the close of regular trading.

"Investors aren't even paying a market rate for AIG's businesses in its current bundled form," Mr. Hall said in the research note.

AIG has fallen 20 percent this year on concerns about losses related to sub-prime mortgages, making it the third-worst performer in the Dow Jones Industrial Average after Citigroup Inc. and Home Depot Inc.

The company's loss in share value shows investors assume AIG will post $17 billion in sub-prime-related losses, Hall said, an "implied loss to stretch believability."

AIG has units that originate, insure and invest in home loans. Its third-quarter profit fell 27 percent to $3.09 billion on losses related to the worst US housing recession in 16 years, missing analysts' estimates.