Seeking Alpha

Value Growth In...'s  Instablog

Value Growth Investments
Send Message
Deep value investor with focus on long-term investments with good growth potential. I am a Chartered Accountant with a Masters in Computer Applications and currently pursuing MBA in Information Management with over 17 years of investing experience in stocks, options and commodities.
  • A Second-Look At AIG P&C 0 comments
    Feb 23, 2014 10:21 PM | about stocks: AIG
    • Analysts are wrong in the interpretation of P&C combined ratio, which helps in the short-term as we can do buy-backs below the book value - this goes a long way in improving EPS.
      If we exclude Prior year development net of premium adjustments from the P&C adjusted combined ratio 102.-3.1, P&C has been profitable with a adjusted combined ratio of 99.1. If we don't get any major insurance loss like Sandy, combined with the increase in premiums (which generally happen after a storm), 2014 will be a fantastic year for P&C.
      In fact, AIG has healthy premium growth in P&C which augurs well for the future. AIG lost around $189mn in aircraft leasing business (1,117 - 1,306). The AERCAP deal is a double whammy or probably a triple whammy for the following reasons:
      1. They will not lose money anymore on aircraft leasing business.
      2. They will have recurring income from AERCAP as they are able to turn the business to profit from a loss.
      3. The sale frees up liability of around $20 billion, which can be used to underwrite new policies. I assume an additional $200mn can be earned as a result of this alone.
      Bottom line, AIG need not do any magic for the turnaround - doing the business as usual itself should have telling effects

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: AIG, AIG-WTPlease add AIG warrants symbol to your database SYMBOL: AIG-WT (in yahoo finance)

    Themes: Insurance, AIG Stocks: AIG
Back To Value Growth Investments' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.