American International Group, Inc. (AIG)

[linco418]

Aig will be back at 2000$ a share in 3-4 year:)

[Porgie Tirebiter]

Looks good so far. A dividend increase would have been nice...

[TRUISM]

AIG 2Q Profits Climb As Insurer Focuses On Core Business
By Adam SamsonPublished August 04, 2014FOXBusiness

Click For foxbusiness.com








American International Group (AIG) revealed quarterly profits Monday that easily beat Wall Street’s expectations, reversing a string of disappointing results from other large insurers.

The New York-based firm logged second-quarter after-tax operating income of $1.25 a share, compared to $1.12 a share in the same three months in 2013. The insurance giant’s EPS easily topped Street views of $1.05.

"AIG's results in the second quarter were solid. Overall, our businesses demonstrated our continued discipline and resilience, underscoring our focus on improving the results of our core insurance businesses," said AIG CEO Robert Benmosche in a statement.

Net income attributable to AIG jumped to $3.1 billion in the second quarter from $2.7 billion the year prior. The insurer in May closed a deal to sell its interest in International Lease Finance Corporation (ILFC) to AerCap Holdings in a cash-and-stock deal valued at $7.6 billion. As part of the pact, AIG scooped up a 46% stake in the Netherlands-based aircraft-leasing firm, and logged a $1.4 billion after-tax gain.

Digging into the results, AIG’s property and casualty division, its biggest, posted an operating income of $1.36 billion, up 25% from the year prior. Catastrophe losses, which proved a tough spot in rival Travelers’s (TRV) second-quarter results, shrunk to $139 million from $316 million in 2013. Net premiums written were little changed at $9.21 billion. The unit’s combined ratio fell to 98.8, indicating it earned more in premiums than it’s paying in claims.

Meanwhile, AIG’s life and retirement division saw its pre-tax operating income edge up by 3% to $1.18 billion amid gains in the retail and institutional areas. Assets under management climbed 13% to $332.8 billion.

The firm’s mortgage guaranty business, by far its smallest unit, raked in profits of $210 million, up sharply from $73 million in 2013.

AIG has been undergoing significant change since 2008, when the government bailed the firm out at the height of the financial crisis. It’s focused more tightly on its core insurance business, shedding assets like ILFC.

Benmosche, who steered the company through its painful post-crisis years, including the full repayment of its bailout, said previously he will be stepping down in September. He’ll be replaced by Peter Hancock, the firm’s property-casualty chief.

“As we look towards the future, I have every confidence that Peter will lead AIG to even more sustainable prosperity in the days and years ahead,” said Benmosche.

Separately, AIG said in a regulatory filing it settled for $960 million a crisis-era class-action lawsuit alleging claims it made about its sub-prime exposure and other issues were “materially false and misleading and ... artificially inflated the price of [AIG’s stock].” The pact remains subject to completion.

Shares jumped more than 3% in extended action, adding to year-to-date gains of 3.1%.





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[TRUISM]

Prudential, AIG ‘could divest units in a crisis’
BY ZACHARY TRACER AND JESSE HAMILTON, JULY 04 2014,

Click For BDlive Article






NEW YORK — American International Group (AIG) and Prudential Financial have told regulators they could divest units and halt policy sales to avoid requiring a bail-out in a future crisis.

AIG, the insurer that repaid the cost of a US rescue in 2012, and Prudential, which did not take US Treasury department funds, submitted the wind-down plans for the first time after being designated as systemically risky by federal regulators last year.

The public portions of the plans, released on Thursday, are similar to those submitted by banks in their reliance on unit sales.

If the sale of assets is insufficient to stabilise AIG, the insurer’s main subsidiaries would eventually be liquidated under the supervision of state and national watchdogs, according to the company’s document.

"AIG believes that each resolution strategy is feasible and would not give rise to adverse effects on the financial stability of the US," the New York-based insurer said in the document.

A resolution plan from General Electric’s finance unit, deemed systemically important last year, was also disclosed on Thursday. Banks including Goldman Sachs, JPMorgan Chase and Wells Fargo had proposals posted online that were similar to documents filed a year ago.

If the plans are not credible, regulators can ask for improvements or, if shortcomings persist, eventually force structural and portfolio changes at the firms. The biggest banks have not received a response from regulators to the plans they filed last year.

AIG and Prudential said in the documents that some units could be wound down in chapter 11 bankruptcies, while state-regulated insurance subsidiaries would be handled by those watchdogs.

The "preferred strategy for resolution involves the reorganisation of Prudential," the insurer said. Prudential and its main asset manager "would likely sell certain businesses and reorganise around the businesses each elects to retain", it said.

Prudential, based in Newark, New Jersey, is the second-largest US life insurer.

Number one, MetLife, is in the final stages of consideration to be labelled systemically important, and therefore was not required to submit a plan.

In its aim to prevent a repeat of the 2008 credit crisis, the 2010 Dodd-Frank Act requires the most complex financial firms — banks and non-banks such as AIG — each to plot its own demise.

The companies must send annual "living wills" to the Federal Deposit Insurance Corporation and Federal Reserve that take these agencies through a hypothetical liquidation that will not damage the wider financial system or call for taxpayer intervention.

Bloomberg





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[TRUISM]

AIG's Restructuring Initiative Shows Potential - Analyst Blog
June 27, 2014


Click For Benziga,com Blog From Zack Analyst



*On Jun 27, we issued an updated research report on American International Group Inc. (NYSE: AIG). The successful streamlining of operations to control costs, along with business de-risking, strong ratings and capital flexibility attained with the divestment of ILFC should boost AIG's results ahead. However, intense competition and volatility in interest rates and currency pose near-term risks.

This Zacks Rank #3 (Hold) stock has delivered positive earnings surprises in all the last 4 quarters with an average beat of 16.7%. Although the company's first-quarter 2014 earnings topped the Zacks Consensus Estimate by about 12%, it was lower than the year-ago quarter figure by 9.7%.

AIG has also been incurring high catastrophe losses and restructuring charges, including loss from discontinued operations, which reduced operating earnings significantly in the past several quarters. Although the company's operational realignment indicates long-term synergies, the implementation costs may hamper margins in the upcoming quarters. Moreover, a weak interest rate environment continues to reduce returns on investment and equity.

Increasing Capital Flexibility

Nonetheless, AIG has divested redundant assets worth over $70 billion at attractive valuations since 2008. Adding to AIG's capital flexibility, credit profile and liquidity, the divestment of ILFC (the only major-most asset left for disposition at AIG)has enabled the company to get rid of liabilities worth $2.6 billion and focus on core insurance businesses.The deal is projected to have a positive impact on non-operating pre-tax gain worth $2.2 billion in second-quarter 2014, resulting in a book value accretion of $0.97 per share.

The company's aggressive liability management initiatives are also aiding improvements in operating cash flow and debt leverage. Going forward, we expect the company to benefit from its scale of operations, pricing improvements and disciplined expense management from the ongoing operational restructuring, thereby creating a more streamlined organization.

Overall, a balanced risk-reward balance in the near term caused some revision of estimates for 2014 and 2015 over the past 30 days. The Zacks Consensus Estimate for 2014 moved north by a cent to $4.39 per share, while the same for 2015 is pegged at $4.92, down 1 cent a share. On year-over-year basis, earnings are expected to fall by 3.7% in 2014 and then grow by 12.1% in 2015.



*The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.





TRUTH

[TRUISM]

It appears that the summer has been good to you already.

Hope it continues.



TRUTH

[Porgie Tirebiter]

I had sold $54.50 calls at the start of the month because I really thought AIG was kind of temporarily overbought. At expiration on the 13th the calls were underwater so I went ahead and let all my shares go at $54.50 and then promptly sold $54.50 puts the next Monday to get back in.

Of course, then I have to sit and watch AIG go to $55.70 without me, but stocks go up and stocks go down... Can't worry about that.

Anyway, when I posted that I had just re-purchased half my shares outright at $5.36 (14¢ less than I sold them for) and now I needed to either spend money to cover the puts or have the stock do it for me by going above $54.50 which it co-operated and did.

I ended the day in a covered short strangle. Sold July 11 calls for 35¢ and puts for 36¢ for a net of 71¢.

[TRUISM]

I suppose congrats are in order.



TRUTH

[Porgie Tirebiter]

C'mon, I need $54.51 or better at today's close!!

[TRUISM]

Bob Benmosche is going to be known for his accomplishments at AIG.

Was he opinionated,certainly.


Did he rub some the wrong way, surely....



Was he effective: DEFINITELY.



In short,he was (and by all accounts,still is) the right person for the job.





TRUTH

[Porgie Tirebiter]

You can't fault Bob Benmosche. His tenure began 10 months after the crisis. He was appointed (against his will initially) by the Treasury Dept. to salvage something out of the Treasury's "investment". One can argue about what's right or wrong about the government's involvement with the AIG bailout, but the bailout was ancient history by the time Benmosche took the reins.

He turned a smoking crater into handsome pay-off for the U.S. Treasury. In short, Bob Benmosche bailed out the bail-out.

[TRUISM]

AIG’s Benmosche — the man, the mouth — bails
Opinion: The CEO helped save the biggest U.S. insurer, even if he got in the way
June 13, 2014, 2:12 p.m. EDT

By David Weidner, MarketWatch



Robert Benmosche, chief executive officer of American International Group



SAN FRANCISCO (MarketWatch) — Let’s make this clear from the start. Robert Benmosche is not primarily responsible for saving American International Group Inc., the troubled insurer and financial-services company he was brought in to lead in the summer of 2009.

Willingly or not, U.S. taxpayers were.

So, as AIG AIG +0.20% announced this week that Benmosche will step down Sept. 1 and hand the reins of the insurer to Peter D. Hancock — a move that came sooner than expected — it’s time to look back on the Benmosche era at AIG, the biggest and, arguably, the most controversial of the financial-crisis bailouts.

In 2008, AIG received a $182 billion commitment from the Treasury Department and the Federal Reserve. Ultimately, it tapped $67.8 billion. That’s what saved AIG. And if you’re an investor, it was the government’s support that helped keep the stock afloat in the early days of Benmosche’s tenure as chief executive.

But even with government support, being the chief executive of AIG was hardly a matter of minding the store. As the Latin scholar Publilius Syrus wrote, “Anyone can hold the helm when the sea is calm.”

For AIG under Benmosche, the sea was anything but calm. Benmosche had serious flaws as CEO, but few could argue that he wasn’t effective in his primary task. The AIG ship has emerged from a perfect storm of its own making.

AIG not only repaid the government (which made an additional $5 billion on warrants it got as part of the bailout), but earned a $9 billion profit last year and paid taxes for the first time since its bailout. (AIG would have reported a smaller profit in 2012 and no profit the year before that had it not been for $20 billion in income-tax credits.)

This is no small feat. It’s sometimes hard to remember that AIG was once considered a lost cause. Some predicted it would be acquired or sold off for parts . And why not? It reported the biggest single-quarter loss in U.S. history, $61.7 billion, in 2009. And that came after repeated losses of tens of billions in preceding quarters.

Today, it’s half the size in terms of assets and revenue. But AIG’s most recent year of profit was close to two-thirds of its 2006 profit ($14 billion) and more than the company produced in 2007 ($6.2 billion). The stock is up more than 340% since its nadir in the summer 2009.

That’s impressive given that AIG ground through a series of sales, divestitures and spinoffs to raise money. Moreover, Benmosche was selling international divisions and insurance portfolios in a buyer’s market with an added twist: There weren’t any buyers.

Yet AIG, under Benmosche, was able to sell assets, notably, its Asian unit, AIA Group Ltd., in 2012. That deal netted more than $35 billion — a little more than Prudential PLC, a U.K.-based insurer, agreed to pay in 2010 before cutting its offer to $30.4 billion. Benmosche was second-guessed for allowing the Prudential acquisition to fall through.

Benmosche’s moves were, as Paul Newsome, an analyst at Sandler O’Neill & Partners, said, “very important and quite critical to the recovery.”

The problem for Benmosche was that AIG’s turnaround was often overshadowed by his blunt talk. The former CEO of MetLife MET -0.46% immediately doused gasoline on a public that was furious with the AIG’s cavalier, and ultimately costly, approach to risk. He defended post-bailout bonuses to employees, called Washington lawmakers opposed to them “crazies” and said then-New York State Attorney General Andrew Cuomo “doesn’t deserve to be in government.”


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[TRUISM]

AIG Names Peter D. Hancock New CEO

Hancock to Take New Post Effective Sept. 1, Replacing Robert H. Benmosche

By LESLIE SCISM and JOANN S. LUBLIN
Updated June 10, 2014 8:59 p.m. ET



Peter D. Hancock, a risk-management expert, has run AIG's property/casualty business since 2011. Philip Montgomery for The Wall Street Journal




American International Group Inc. AIG +0.20% named longtime banker Peter D. Hancock to succeed Robert Benmosche as head of the giant insurer whose woes nearly took down the financial system in 2008.

Mr. Hancock, 55 years old, will take the helm of AIG on Sept. 1, leading a revitalized company coming off almost five years of triage and restructuring under Mr. Benmosche.

Mr. Hancock, head of AIG's property/casualty division since 2011, was seen as a front-runner for the top job, but the move came sooner than many had expected. Mr. Benmosche, who just turned 70, previously had said he was interested in staying through the first couple of months of 2015.

Mr. Benmosche is being treated for cancer, but the company said he is as active as ever.

Mr. Hancock takes over an AIG vastly different than the one Mr. Benmosche inherited when he was brought out of retirement in 2009 to resuscitate the ailing conglomerate. Due to a series of bad derivatives bets placed by a financial-products unit within the firm, AIG went to the brink of collapse in 2008 during the height of the financial crisis and required a bailout of $182 billion.

In terms of employees and total assets, AIG is roughly half the size it was before the crisis, thanks largely to divestitures of two international life-insurance units and sales of numerous other businesses. The company, with a market capitalization of almost $80 billion, returned to profitability and in 2012 finished repaying taxpayers the aid it required in the bailout.

A colorful and at times outspoken executive, Mr. Benmosche was credited by many employees with helping to restore pride in the company.

More
Meet Peter Hancock
Three Challenges for New CEO
Benmosche to Employees: 'We Saved AIG'
Benmosche's Memorable Quotes
AIG, Oak Hill Join to Lend to Midsize Firms
Mr. Hancock was born in London and grew up in Hong Kong. A former J.P. Morgan banker and risk-management expert, he will head a company that for more than 40 years has primarily been commaded by executives with forceful personalities: Mr. Benmosche and the man who built AIG into a powerhouse, Maurice "Hank" Greenberg.

Mr. Hancock, who is relatively reserved compared with those AIG bosses, in an interview credited Mr. Benmosche with saving AIG and said "the essential strategic steps of the turnaround" are complete. He said Mr. Benmosche will stay as an adviser "for as long as he feels like it."

AIG's nonexecutive chairman, Robert S. "Steve" Miller, said the company's board approved Mr. Hancock as the new CEO on Monday, in large part to alleviate speculation within the company and elsewhere about who would take over for Mr. Benmosche. The board hoped the decision "would help clear the air so people could get away from the water cooler and get on with life," Mr. Miller said.

Previously
Race for AIG's Top Job Has Two Favorites (May 11, 2014)
AIG Profit Falls 27% (May 5, 2014)
AIG CEO Received 2013 Pay Package of $14.8 Million March 13, 2014)
In a statement, Mr. Benmosche said, "We needed to name a successor. A long transition can become dysfunctional. Peter is ready and extremely capable and is fully prepared to run AIG."

Mr. Hancock's CEO compensation and employment contract haven't been discussed yet.

In recent months, the insurer's board had also looked closely at another internal candidate, Jay Wintrob, who runs the company's big life-insurance and retirement business.

Mr. Miller said he told Mr. Wintrob that "both candidates were viewed as highly valuable," and that Mr. Wintrob said he would stay. "The role Jay has going forward is something for Jay and Peter to talk out," Mr. Miller added. Mr. Wintrob didn't respond to a request for comment.

Mr. Hancock said, "I will work very hard to persuade him to stay."

Mr. Wintrob may be wooed about CEO jobs elsewhere, but "I can't imagine him making a [job] change—at least not quickly,'' said one retired insurance-industry recruiter who knows him well. "Jay is very loyal to AIG,'' the acquaintance added.

After joining AIG in 2010, Mr. Hancock was promoted to run the global property/casualty unit the next year in a move widely interpreted by analysts and investors as setting him up as the heir apparent. AIG's property/casualty unit, which spans more than 90 countries, is based in New York and long has been the heart of the company.

AIG shares weakened slightly after the news in aftermarket trading, down about 0.3% at $54.90.

In running the unit, Mr. Hancock sought to wring out costs and improve selection of risks the company insured, but some Wall Street analysts and investors were dissatisfied at the pace of progress. "We do aspire to have better profitability than we have today," Mr. Hancock said of the company broadly.

Mr. Hancock's background at J.P. Morgan included a stint running a unit that helped pioneer the use of complex derivatives. Those sorts of financial instruments nearly brought down AIG years later after they were misused by some of the firm's employees. Mr. Hancock later served as J.P. Morgan's chief financial officer and chief risk officer. When AIG hired him, it said his experience with such complex financial products would help with its rebound.





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[TRUISM]

AIG Announces Amended and Restated Bank Credit Facility
June 19, 2014, 9:41 a.m. ET


Click For WSJ.com AIG PR


American International Group, Inc. (NYSE:AIG) announced today that it has entered into an amended and restated 5-Year $4 billion Bank Credit Facility.

The amended and restated facility replaces the previous 4-Year $4 billion facility that AIG entered into in October 2012. In addition to the tenor increase, the entire $4 billion facility is now available both as revolving credit and for the issuance of letters of credit. This is an increase from the $2 billion letter of credit sublimit that existed in the previous 4-Year facility.

"We are pleased to have the support of our lenders in amending this credit facility," said David Herzog, AIG Executive Vice President and Chief Financial Officer. "The terms of this newly amended and restated facility provide greater flexibility to AIG and our subsidiaries."

Thirty-three banks participated in the facility with J.P. Morgan Securities LLC and Citigroup Global Markets Inc. acting as lead arrangers.

American International Group, Inc. (AIG) is a leading international insurance organization serving customers in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange.

Additional information about AIG can be found at www.aig.com | YouTube: www.youtube.com/aig |Twitter: @AIGInsurance | LinkedIn: http://www.linkedin.com/company/aig |

AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc. For additional information, please visit our website at www.aig.com. All products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Products or services may not be available in all jurisdictions, and coverage is subject to actual policy language. Non-insurance products and services may be provided by independent third parties. Certain property-casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are therefore not protected by such funds.






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[TRUISM]

AIG Announces New Global Commercial Property Coverage and Services for the Mid Market
06/18/2014


Click For Press Release


With more middle market companies seeking opportunities overseas, the American International Group, Inc. (AIG) insurers today announced the launch of a new line of multinational commercial property products and services, including expanded coverage, loss prevention engineering, and risk management solutions, for mid-sized businesses confronting global risk exposures.

AIG’s Property Performance Series provides comprehensive commercial property solutions for mid-sized businesses in Australia, Canada, Europe, South Africa, and the United States. The company plans to expand the policy offering to businesses in other countries later in 2014.

The Property Performance Policy is an easy-to-navigate, all-risk property damage and business interruption policy that can offer a company cover for all operating locations and property exposures. AIG’s single, concise policy form can include environmental clean-up, equipment breakdown, crisis management, and cyber coverage, with additional property coverage extensions available.

“Middle market companies are shifting their focus from deep cost cuts to strategic opportunities for growth, including global expansion,” says George Stratts, President, Global Property, AIG. “With the Property Performance Series, AIG is meeting the needs of our middle market customers wherever they go.”

The policy also offers Optimized Business Income coverage, which provides clients the flexibility of choosing settlement on either a gross profits or gross earnings basis after a loss, whichever results in a greater loss calculation.

“The complexities facing middle market companies operating globally do not have to extend to insurance,” says Carol Barton, Head of Product Strategy, Global Property, AIG. “Our offering is designed to help clients maintain their business continuity by providing outstanding coverage and contract certainty, as well as services modeled on those provided to the largest multinational organizations.”

As part of the new Property Performance Series, AIG also is scheduled to roll out several industry-focused policy forms tailored to provide coverage enhancements for clients in different industry segments, including healthcare, higher education, manufacturing, real estate, and retail.

AIG’s middle market offering, combined with its Large Limits, U.S. Excess and Surplus Lines coverage, and Small to Medium Size Enterprise capabilities, enables brokers to access broad coverage and market-leading capacity for clients of every type.

American International Group, Inc. (AIG) is a leading international insurance organization serving customers in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange.

Additional information about AIG can be found at www.aig.com | YouTube: www.youtube.com/aig |Twitter: @AIGInsurance | LinkedIn: http://www.linkedin.com/company/aig |

AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc. For additional information, please visit our website at www.aig.com. All products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Products or services may not be available in all countries, and coverage is subject to actual policy language. Non-insurance products and services may be provided by independent third parties. Certain property-casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are therefore not protected by such funds.





TRUTH

[Porgie Tirebiter]

Robert Benmosche to step down Sept. 1st.

We knew this was coming but hoped it wouldn't, at least this soon.

Robert Hancock helped establish the derivatives trading branch at JPM... Now that's just a little scary considering what got AIG into trouble in the first place.

[Alpha Investor]

Buying 200 shares tomorrow! 2b stock buy back? Confidence!

[Porgie Tirebiter]

AIG trades ex-dividend this morning.

[Porgie Tirebiter]

Nice earnings beat, although not as good as a year ago. Top line is a little disappointing.

Numbers should keep the P/E fixed right around 8 at a share price of $50. Looking for some margin expansion as 2008 continues to fade into memory. If AIG was to trade at the same multiple as The Hartford (HIG) we'd have a $100 stock.

[Porgie Tirebiter]

Interesting comments on AIG: http://video.cnbc.com/gallery/?video=3000254839

There are also comments in the video about Sand Ridge (SD) which is another stock I own a chunk of.

[Alpha Investor]

I am a little more optimistic for its future... I place a 100 valuation in 3 yrs easy. I want it stay below 50 for a while so I can keep loading.

[Porgie Tirebiter]

AIG is a $60 stock just on valuation alone.

Look at MetLife (MET) trading at 17 times earnings. If AIG got some P/E expansion to match that AIG would be an $80 stock.

[Alpha Investor]

I entirely agree with the upgrade. Aig is extremely cheap and has been for years. Steady share price increase, increasing dividends and revenue increases all bullish techs. Looking buy more shares asap on natural low point this is undervalued!

Buy buy buy

[Porgie Tirebiter]

Just goes to show the dangers of trading in extended hours on instant news.

Depending on whose numbers you use AIG is trading 15 to 20% below book value and less than 10 times earnings based on yesterday's numbers.

Any shares bought below $50 are a bargain.

[Patswil]

yeah, AH isn't really regulated like regular market hours--it's all over the place today...I saw $51.20 I think---probby not a short either...let's see what he says in the CC Friday morning

[Porgie Tirebiter]

I don't trust the ticker in extended hours trading. Bob Benmosche should be on CNBC shortly.

[Patswil]

Volume in AH is big too---at least 2 mill in the last few minutes

[Patswil]

PPS jumping in pre AH

[Porgie Tirebiter]

Top and bottom line beat. Dividend going up 25% and a boost to the re-purchase program.

[Porgie Tirebiter]

Earnings are out any minute... AIG is up sharply just after the close.

[OGSPECULATOR]

AIG$$$

[Alpha Investor]

This is a very reasonable target price for AIG. I forsee long term recovery 15-18% a year. Very very achievable for a company of this potential

[Porgie Tirebiter]

Barclay's raises AIG price target to $60.

[Porgie Tirebiter]

Credit Suisse upgrades AIG to "Outperform" this morning with a $59 price target.

[LouReeves]

American International Group (AIG) has come a long way since its record $18 billion government bailout in the financial crisis. It was reported that after all was said and done, the bailouts done by the federal government were likely to turn a profit. Read more at : http://personalmoneynetwork.com/moneyblog/2012/08/27/aig-bailout/

[TRUISM]

Good luck with your new play... Looks like we may have an ILFC deal this morning.

Thanks PT.

GLTA.


Take Care and God Bless....God Bless Us All.

Respectfully,


Truth4Once

[Porgie Tirebiter]

Good luck with your new play... Looks like we may have an ILFC deal this morning.

[ChuckD-MSB]

I sold out my May $55 calls at $1.40 Friday, made a few bucks.

They have been fluctuating from just under a dollar to $1.40 or so.

Pretty good trading if you watch it.

[TRUISM]

Hey there PT.

Sold my position in AIG to free up funds for another play.

I have a good feeling that the deal will go through;one way or the other.

May all benefit from this stock now and in the future.


Take Care and God Bless....God Bless Us All.


Truth4Once

[Porgie Tirebiter]

I'm thinking uncertainty over the ILFC deal has resulted in about a $4-$5 drag on the market price of AIG shares.

[ChuckD-MSB]

AIG in talks to sell ILFC to AerCap Holdings-Bloomberg

Thu Dec 12, 2013 1:14pm EST


Dec 12 (Reuters) - Insurer American International Group is in talks to sell its jet-leasing finance business to AerCap Holdings NV, Bloomberg reported, citing people with knowledge of the matter.

Netherlands-based AerCap, the world's largest independent aircraft lessor, may team up with other bidders for International Lease Finance Corp, Bloomberg reported. ()

AIG has not formally terminated its agreement with the Chinese group that agreed last year to buy a majority of ILFC for about $4.2 billion, Bloomberg reported.

AIG declined to comment on the report.

Chief Executive Robert Benmosche said in November that AIG hoped to decide on a sale or an initial public offering of ILFC in the fourth quarter.

AIG said in December 2012 that it had reached an agreement to sell a stake of up to 90 percent of California-based ILFC to a consortium of investors, based mainly in China, for $4.7 billion.

ILFC is one of the biggest aircraft lessors in the world, but has recorded big write-downs in recent years on the value of the older planes in its fleet.



http://www.reuters.com/article/2013/12/12/aig-sale-idUSL3N0JR3SZ20131212

[Porgie Tirebiter]

There might be some ILFC news about to hit. I'm looking.

[TRUISM]

Come on AIG....

Give us some news to get us out of the high 40's and into the 50's and beyond for good.


Take Care and God Bless....God Bless Us All.


Truth4Once

[TRUISM]

AIG’s ILFC Bidders Said in Talks to Add Backers to Group
By Cathy Chan & David Welch - Nov 18, 2013 1:58 AM ET

Click For Article


Taiwanese tycoon Richard Tsai and Chinese financier Xiao Jianhua are in talks to help fund a $4.2 billion bid for American International Group Inc. (AIG)’s aircraft-leasing unit, three people with knowledge of the matter said.
Tsai’s family, and companies it controls, would take as much as a majority stake in the group that has agreed to buy International Lease Finance Corp., said two people, who requested anonymity because the details are private. Xiao would mainly be involved in providing financing, one person said.

American International Group Inc. has sought to sell International Lease Finance Corp. since 2008 when it began divesting units to repay a U.S. bailout. Photographer: Craig Warga/Bloomberg
The involvement of Tsai and Xiao may help the group, which has been led by Hong Kong-based P3 Investments Ltd., bridge a funding gap that’s held up the deal for several months. AIG has sought to sell ILFC since 2008 when it began divesting units to repay a U.S. bailout. Closing the deal, which was announced last year, would help AIG Chief Executive Officer Robert Benmosche cut debt at the New York-based insurer.
The makeup of the group has not been finalized and there are several parties considering taking part in the deal, the people said. Tsai, the son of Taiwan’s second-richest man, is also a limited partner in P3 Investments, two people said. The Committee on Foreign Investment in the U.S. will only approve a sale of ILFC if there is no dominant shareholder in the consortium, one of the people said.
The deal has suffered several missed deadlines by the original group of investors, who agreed last December to pay $4.2 billion for 80 percent of the unit. AIG had previously said it expected the deal to be completed in the second quarter. New China Trust Co. pulled out of the bidding group in May, a person with knowledge of the matter said earlier.

IPO Option

The bidding group is seeking to borrow $2.1 billion from lenders including Taiwan’s Mega International Commercial Bank Co. and Bank of Taiwan for the ILFC purchase, two people said.
Tsai declined to comment on in an e-mail from his office, as did a representative for Xiao and spokesmen for AIG and ILFC.
Xiao said in an interview with 21st Century Business Herald in May that he is interested in participating in the bid for ILFC, citing the potential to profit from an initial public offering of the company immediately after buying it. Fubon Financial (2881) Holding Co. is also interested in the deal, Xiao told the Chinese newspaper at the time. Tsai is vice chairman of Fubon Financial.
Fubon Financial shares gained 2.1 percent as of 2:30 p.m. local time today, the biggest increase since Oct. 3.

Impairment Charge

The insurer said in 2011 that it could cut its stake through an initial public offering, and CEO Benmosche said as recently as Nov. 1 that AIG can pursue an IPO to divest ILFC if the China deal collapses.
ILFC took the third-quarter impairment charge after determining that four-engine jets in its fleet, such as the Airbus A340-600, have fallen out of favor as airlines turn to more fuel-efficient twin-engine planes. The impairment had no effect on AIG’s results because the company booked a loss on plans to sell the unit that was recognized last year.




Take Care and God Bless....God Bless Us All.


Truth4Once

[Alpha Investor]

Very good article! I agree with all of that and entirely feel aig has excellent downside protection as with pb I simply don't see it falling below much further current levels. I boughtnand held a year ago and fully intend hold years down the road.

[TRUISM]

American International Group Welcomes Higher Interest Rates

Click For Entire Seeking Alpha Article


Nov 11 2013, 15:21 |
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)

Recently, I received few comments on my recent American International Group (AIG) article that drew my attention towards the impact of changing interest rates environment on AIG. Therefore, in this article I will give an in-depth analysis of the impact of interest rate changes on AIG.

As the US economy recovers from the financial contraction, so does the property-casualty and life insurance industry. The slow economic growth coupled with the rock bottom interest rates had chipped away investment income and compelled carriers to increase rates to offset, while being mindful of market share loss. Things seem to be reversing now for insurance companies like American International Group as the good news of once again rising interest rates hit the market last week.

Immunized investment portfolio

The major risk that financial institutions face is the movement in their investment portfolio following the movement in interest rates. However, AIG has immunized its investment portfolio from the interest rate risk by matching a significant portion of the duration of its investment assets with the duration of its liabilities. This results in hedging away the price risk of the investments made by the company. In the current scenario of soaring interest rates where the company may witness a fall in the value of its assets, this loss is likely to be counter balanced by the decline in the market value of its equal duration liabilities. Thus, AIG remains immunized against the interest rate fever.

Analyzing the company's investment portfolio, it has mainly invested in investment grade bonds with maturities ranging in between 5 to 10 years or higher than 10 years. Under the five year duration bracket, the company has slightly higher insurance and investment contract liabilities to pay compared to its parallel investment assets which will result in a net favorable impact in the prevailing scenario of higher interest rates. However, higher duration (> 5 years) investments in fixed income securities are greater than the contract liabilities of similar duration which exposes the company to some risk. The net interest rate risk exposure is very low as equal duration liabilities serve as financial hedges in place to take out some of the sting.

Reinvestment rate: the margin driver

There are two sources of generating revenue and ultimately, profits for AIG. Underwriting premiums is the first one and investment income takes the second position. The latter factor stands to be the primary driver of margins. I can very well explain this with the help of combined ratio, a metric used in the insurance industry to gauge its underwriting activity.



Source: AIG Investor Presentation

A combined ratio of 101.6 explains that currently the underwriting business is contributing a loss of 1.6% to AIG's bottom line. Wondering where all the net profit margin of 14.37% in the third quarter of 2013 came from? Yes, it is the investment income that continues to uplift the company's bottom line. In fact, for AIG, their very survival depends on it.

The insurance business heavily depends on the reinvestment of its premiums raised to match the claims when they arise. Due to its historically low interest rates, the investing environment since the Great Recession has been a boon for borrowers and a major headache for insurer companies. But the game is turning in the favor of AIG now as the interest rates have started to move upwards. The wait is over for this company who is well-positioned to invest the premiums at a higher rate and enjoy a higher investment income in the upcoming quarters.

It is the reinvestment risk, rather than the price risk, that makes interest rates so important for the insurance carriers like AIG.

No gain from mortgages

Unlike many other industry players, AIG was unable to pocket some dollars from the recovery in the prices of mortgaged-backed securities (MBS) following the improvement in the housing market. Also, mortgages make up to only 6% of the company's current investment portfolio.

Isn't it unusual from a big insurance company like AIG to have remained largely indifferent to the favorable movement in the price of MBS? Here's the answer. During the financial crisis of 2008 and 2009, the company was compelled to sell its MBS portfolio at a significant loss to meet the immediate liquidity need. The company panicked to sell its mortgages to meet the collateral calls from banks that owned credit default swaps (CDS) written by AIG that had to be paid out when the housing market crashed.

Although the company is trying sue some of the major banks against the fraud of selling MBS to AIG right before the financial crisis was about to set in which pushed the company on the verge of bankruptcy. According to AIG, "Bank of America and the other defendants created mortgage securities backed by shoddy loans and sold the investments based on inflated credit ratings that masked their true risk."

Valuation Insight

Price to tangible book value (P/TBV) is a solid measure for analyzing an insurance company which has an active market for most of the tangible assets reported on its balance sheet. Filtering out the intangibles that may be used to window dress the financial position of a company is what makes this heuristic pure and transparent.

AIG is currently trading at a P/TBV of 0.72 compared to the industry norm of 0.99. What more can an investor ask for than a stock like AIG that upholds a bright future outlook based on its higher investment income prospects and is also available at a significant discount.


Take Care and God Bless....God Bless Us All.


Truth4Once

[TRUISM]

American International Group: Are We Overreacting?

Cick For Seeking Alpha Article


Nov 6 2013, 09:04 | about: AIG, includes: ILFC BOOKMARK / READ LATER
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)

American International Group (AIG) has made necessary steps towards placating the public's trust and separating itself from the negative notoriety. Even with the soft market seen in the consumer insurance industry this quarter, this stock has exhibited a reasonably good quarter; up 36.77% YTD (01.02.13-11.01.13). During the same period, AIG also continued minor share repurchases by investing $192 million to buy back four million shares. With a 17% increase in net income and diluted earnings-per-share at $1.46 for the third quarter 2013 versus $1.13 for the same quarter in 2012, an increase of 30%, many investors were alarmed by CEO Bob Benmosche insinuating that AIG might not meet some its goals in a conference call with analysts on Friday. These comments in addition to an underwriting loss at its property-causality unit precipitated AIG's biggest decline in the Standard and Poor's 500 Index.

Falling Short of Expectations

On Friday's closing, November 1st, the insurer dropped $3.37 or 6.5% to $48.28. Property-causality division is AIG's largest division. This was reflected in the operating ROE, which was 6.2% versus 7% last year. Benmosche told analysts that he would stop providing specifics on the company's goals, highlighting a 10% return on equity target for 2015. In an interview with Bloomberg Television's Betty Liu, he stated, "We are proud of what we have accomplished so far, we're working hard to achieve all those aspirational goals… our only concern is if we can get there by 2015." While this prospective shortcoming seems inevitable, perhaps this is not as much of a setback as it may seem. AIG is still at a huge discount from its tangible book value, suggesting that the stock offers a margin of safety even if this insurer does not yield growth as quickly as expected.

Reflection of Why AIG is in This Situation

Three years post the United States Federal Reserve Bank bailout; AIG presented their revised targets. Private capital was required to replace funding from the government. After being bailed out by the United States Federal Reserve Bank commencing on September 16th 2008, AIG shared their aspirational goals later in 2011, when they needed to persuade private capital to replace the government funding. Essentially, in order to dig themselves out from one hole they ended up unearthing another by making perhaps somewhat lofty aspirational goals that would mollify private investors and diminish fears. These goals, such as generating $25 billion to $30 billion of capital for buybacks, dividends, acquisitions and organic growth are still possible, but perhaps the target date set seems to be too aggressive.

ILFC

Many investors are anxious about how AIG will finally sell off its aircraft-leasing subsidiary, International Lease Finance Corp (ILFC). ILFC is a major contender with relationships with over two hundred airlines and 1,000 aircraft. So while selling this business has not been easy, they are an attractive company. Even though the ILFC is a non-core asset, it could still hold substantial worth for AIG if it is not immediately sold. Emerging markets are creating more demand for air travel making the aircraft-leasing market more stable. However, this is not the plan. In the conference call to analysts Benmosche conferred how AIG is still working on an alternative sale or an initial public offering, as they would like to make a final decision and take action during the fourth quarter. As the aircraft-leasing unit is a prerogative on the list of non-core assets to be sold after the bailout, the final sale will be viewed as affirmative for those investing in this insurer.

When AIG finally does sell ILFC, the capital received could be used towards additional share buybacks helping them achieve the aspirational goals that were previously set forth in 2011. This would enhance shareholder value as the shares are currently trading less than book value.

The Good, The Bad & The Ugly

Chief executive officer Bob Benmosche told the public that AIG might not fulfill the company's aspirations in the time they allotted for themselves. Furthermore, there is additional uncertainty as he did not address which goals exactly AIG could not achieve. To make things worse, selling ILFC with the consortium is not yet definitive. "We still feel they are making slow progress …" said Benmosche to analysts. Not to mention, the public has not forgotten that AIG nearly failed only five years ago and there is some sentiment still about bonuses on the American tax dollar.

On the other hand, AIG had a decent third quarter, not perfect, but decent. The company had 34% growth from 3Q12 in new insurance written. A positive trend can be seen here as well from 3Q11 in Chart 1 taken from AIG's conference call presentation.


(Click to enlarge)

AIG's 3Q13 after-tax operating income was $1.4 billion with an after-tax operating income per share ascribable to AIG of $0.96. AIG also reported net income of $2.2 billion for 3Q13 compared to $1.9 billion 3Q12. On September 30th 2013, shareholders equity totaled at $98.8 billion. AIG also paid cash dividends totaling 1.9 billion in 3Q13. Overall these numbers are promising.


(Click to enlarge)

AIG may not and probably will not accomplish all of their promises to investors back in 2011, but they have certainly made significant steps. In fact, AIG has had a return YTD of over 36% compared to the S&P 500 with a return of 23.51% over the same period. (Chart 2)



CEO Robert Benmosche became the chief executive officer in 2009 during some of the most turbulent times for the company. In 2011, he needed to present an optimistic impression to private capital in order to make the transition back into private equity. If he had not done so, AIG may still have owed the Federal Reserve some of the $180 billion borrowed. Some may view this as not being forthright, however they have made progress as promised, just not as quickly. Benmosche has been steadfast in AIG's pursuit of returning to a market leader. Investors should remain confident and keep their faith in AIG as the CEO's ambitions are in line with the shareholders.

I Know First AIG Forecast

I Know First uses an algorithm to forecast stock performance and to generate stock market forecasts. In a nutshell, the algorithm identifies stocks trading in ranges that deviate drastically from the trends the algorithm deems rational. The algorithm's methodology is discussed in more detail in Citigroup's Competitive Advantage under the section titled Algorithmic Prediction for Citigroup (C). Chart 3 shows I Know First's predictions for AIG in the 1-month and 3-month time horizons. The dark green demonstrates that the algorithm is strongly bullish.


Conclusion

AIG has certainly exasperated investors and analysts between Benmosche's comments, uncertainty about ILFC, and some disappointments in certain divisions such as the property-causality division. However, do not jump ship. AIG is recovering from a major hit and is back on track. There will be bumps in the road, and everything will not go exactly as originally planned. Stockholders are interested in the growth of the share price and increased company value. The personal interest of CEO Benmosche does not conflict with the interest of the shareholders. Remember that he became CEO in 2009, when the market was in turmoil, not in the bullish market beforehand. His comments last week should be viewed as transparency from the managers. AIG is in an upward trend and these hiccups are merely day-to-day noise.

Business disclosure: I Know First Research is the analytic branch of I Know First, a financial startup company that specializes in quantitatively predicting the stock market. This article was written by Joshua Pastore one of our interns. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.


Take Care and God Bless....God Bless Us All.


Truth4Once

[TRUISM]

An Undervalued Stock In The Insurance Industry

[url]seekingalpha.com/article/1811132-an-undervalued-stock-in-the-insurance-industry
[/url][tag]Click For Seeking Alpha Article[/tag]

Nov 6 2013, 09:00 | about: AIG BOOKMARK / READ LATER
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)

American International Group (AIG) is one of the largest insurance companies operating worldwide. Despite its large size, the company has been fighting its way out under the difficult market conditions, characterized by factors such as historically low interest rates, instability in the global markets due to the negotiations over the U.S. debt ceiling, the U.S. Government shutdown and slow growth in the U.S. economy.

Is AIG's investment portfolio vulnerable to changing Fed policy?


Insurance companies invest a substantial amount of their assets in the bond market. Their role in the corporate bond sector is especially prominent. One may attribute insurers' heavy investments in bonds to regulatory reasons which place limits on the investment in high risk market of equities.

Analyzing the company's fixed maturity securities' investments, I noticed that the investment in corporate debt dominates this section with a 51% share. Also, the company has primarily invested in high duration investment grade bonds mainly with maturities in between 5 to 10 years or higher than 10 years. This makes the company highly vulnerable to the interest rate movements. Where it may benefit in a declining interest rate environment, the company also stands to lose significantly in a rising interest rate scenario. Therefore, a recent uptick in interest rates in the US fixed income market adversely affected the company where it experienced a drop in investment returns to 3,573 million in the third quarter of fiscal year 2013 from 4,650 in the corresponding quarter last year.

Apparently, the company is facing a high risk of loss when the Fed announces to finally taper its asset buying program. This would mean that few dollars would now be injected in the US economy and thus, restrict money supply. Ultimately, this will trigger a hike in the interest rates. This may be good news for the new bond investments that the company will make as they will be available at a discounted price and offer a higher return.

Although almost 79% of the company's investment portfolio is dedicated to fixed income investments which will see their fair value plunge like anything once the tapering is announced, the company's interest rate risk is partially hedged by its equal duration liabilities which may also decline in value in the event of interest rate hike. Over the next five years, the company has higher insurance and investment contract liabilities to pay which will result in a net favorable impact in the event of slow-down in asset purchase by Fed. However, higher duration (> 5 years) investments in fixed income securities are greater than the contract liabilities of similar duration which exposes the company to some risk. However, the net interest rate risk exposure is quite low when liabilities are taken into account.

Investment yield

Overall, the company has also experienced a decline in its investment yields as investment purchases have been made at yields lower than the weighted average yield of the existing portfolio. During prolonged periods of low or declining interest rates, the company had to invest new net flows and reinvest the cash flows from investment sales, interest and principal payments of the portfolio in lower yielding securities.

Background risks

Background risks of insurance companies stem from their underwriting business. The company's underwriting activity can be gauged by analyzing its combined ratio. It is a measure of profitability used by an insurance company to indicate how well it is executing its daily operations. A ratio below 100% indicates that the company is making underwriting profit while a ratio above 100% means that it is paying out more money in claims that it is receiving from premiums.

In case of American International Group, the company has moved into the safety zone by bringing down its adjusted combined ratio to 98% in the third quarter this year compared to 100.1% in the corresponding quarter last year, mainly due to lower policyholder benefits and claims incurred.

Valuation Insight

For an insurance company, book value is a strong measure of most of its balance sheet, which consists of bonds, stocks, mortgages and other securities that can be relied on for their value given an active market exists for them. The heuristic for insurance companies is that they are worth buying at a P/B level of 1 and are on the pricey side at a P/B level of 2 or higher.

The company has a P/B of 0.7 as compared to the industry average of 1. Considering the fact that the company has turned its income positive from the underwriting operations, the stock should not trade at a discount to its peers. Going forward, I expect a strong operating performance and a P/B multiple expansion for AIG, which makes it an attractive investment option.



Take Care and God Bless....God Bless Us All.


Truth4Once

[detearing]

$48.28 close, this will be fine...Insurance business is big money.

[Sheeple O Plenty]

One good day its trading at $52.50 again. I added some Nov 50's today for 30 cents for kicks. The chart shows U shaped dips which only last a day or three, so I expect by this point next week we'll be in low to mid $50s.