Mon, Jul. 25, 12:43 PM
- AIG has its own company-specific issues, but like other insurers has been punished by the plunge in interest rates, and is off about 10% this year.
- The company is moving forward, though, says portfolio manager John Heldman - cutting expenses and planning capital returns of about $25B (market cap is $60B) over the next two years (the dividend has tripled since 2013).
- He sees book value - currently around $60 per share - rising 15% annually over the next three to five years, helped along by improving results, a more normal level of reserves, and buybacks being done at a discount to book.
- If so, AIG could be a $100-$125 stock by 2020-21, meaning the TARP warrants - struck at $45, expiring in 2021, and trading just north of $19 each - could be easily be a double or a triple.
Mon, Jul. 11, 3:55 PM
- With the stock price above $130, it's a "good time for investors to take their foot off the gas a little," says Charles Sebaski, downgrading Chubb (CB -0.2%) to Market Perform from Outperform. He remains bullish on the long-term prospects, but after a 25% Y/Y run higher, it's time to "wait for a better entry point."
- Checking the rest of BMO's property & casualty coverage, Outperform-rated names are James River Group (JRVR +0.4%), Hanover Insurance (THG +0.5%), Arthur J. Gallagher (AJG +0.6%). Market Perform: AIG (AIG +0.6%), Travelers (TRV +0.1%), Aon (AON +0.6%), Brown & Brown (BRO -0.7%), Marsh & McLennan (MMC).
Thu, Jun. 30, 7:47 AM| Thu, Jun. 30, 7:47 AM | 3 Comments
Thu, Jun. 9, 4:23 PM
- When issued in January 2011, the warrants had a strike price of $45 (they expire in Jan. 2021). As they get paid out, dividends reduce the strike price and add marginally to the number of shares they can be redeemed for.
- After the $0.32 Q2 payout, the warrant strikes are down to $44.5826 per share from $44.734 previously.
- The number of shares of AIG receivable upon exercise edges up to 1.009 from 1.006.
Thu, Jun. 9, 12:30 PM
Thu, Jun. 2, 7:13 AM
- A California judge rejected AIG's motion to dismiss a lawsuit by Pimco accusing the insurer of lying about its subprime mortgage exposure ahead of the financial collapse.
- Though not buying AIG's argument that Pimco waited too long to sue, the judge noted Pimco can immediately appeal, and that federal courts in comparable cases have reached other conclusions over time limits.
- Pimco is looking to recover losses suffered by more than 60 funds, including its Total Return Fund. It sued AIG last year after opting out of a near $1B class-action settlement between the insurer and other investors.
Tue, May 24, 9:04 AM
- The insurer isn't going to be raising money for startups, but instead, its "Crowdfunding Fidelity" offering is an insurance product designed to protect investors on crowdfunding platforms from fraud.
- AIG's first policyholder in Eureeca, an equity crowdfunding platform registered in the U.K. and based in Dubai. Launched in 2013, it focuses on deals in the Middle East and Southeast Asia.
Tue, May 17, 3:30 PM
- The analyst team of Todd Bault and Erik Bass don't like to write about news items, but two stories today illustrate the "positive optionality" embedded in AIG's future performance.
- One is a report from Insurance Insider saying the company is looking to dispose of $5B in legacy P&C liabilities from its Eaglestone Re subsidiary. This speaks to the freeing up of capital story, but just as important, say the two, the insurer's older reserves have been a significant source of unfavorable volatility, and this is a way to reduce that.
- Second was Carl Icahn upping his stake in AIG to 5.2% of the company, though fellow activist John Paulson has reduced his holdings over the last two quarters.
- At 70% of book value and committing to do what's necessary to boost underwriting margins, AIG is the best chance among insurer's to get multiple expansion. They reiterate their Buy rating.
Tue, May 17, 10:20 AM
- Thomas Russo, the insurer's general counsel, is retiring, reports the WSJ, citing an internal memo. A search is underway, and Russo will remain with AIG until a replacement is found.
- The 72-year old Russo joined AIG in 2010. He had previously been the chief legal officer at Lehman Brothers until its bankruptcy.
- AIG earlier this month added John Paulson and a representative of Carl Icahn to its board as part of a deal to avoid a proxy fight.
Tue, May 17, 7:13 AM
- Calling the capital return story "largely played out," Wells Fargo cuts Hartford Financial (NYSE:HIG) to Market Perform from Outperform, and the price target range to $44-$46 from $50-$52. Yesterday' close was $44.30.
- The team, however, upgrades AIG to Outperform from Market Perform. No details yet on the reasoning.
- AIG +1.25% premarket
Tue, May 10, 12:16 PM
- At the annual meeting tomorrow, Carl Icahn lieutenant Samuel Merksamer and John Paulson will join the board at AIG (AIG +1.5%), part of at least a temporary truce between the insurer's management and activist investors.
- Icahn and Paulson continue to argue for a breakup of the company, while CEO Peter Hancock and his team are steadfast against it. Among the range of outcomes, say observers:
- 1) The new directors unsuccessfully push for Hancock - who has the solid support of the rest of the board - to be removed; 2) Hancock runs out of time in 2017 as the board becomes concerned with a lack of progress with cost cuts or improved underwriting margins; 3) Activists are the catalyst for blazing results; 4) Hancock hooks the new directors up with memberships at National Golf Links of America, and they fall in line with the rest of the board ... This is (sort of) a joke, but the activists - privy to insider information - might decide steps already announced by Hancock have put the company on the right path.
- Source: Leslie Scism and Joann Lublin in the WSJ
- In other AIG news, the insurer is in talks about selling a book of old variable annuity business with about $15B in face value, reports The Insurance Insider.
Mon, May 9, 1:51 PM
- The average yield in the mortgage REIT sector is 14%, says analyst Bose George - probably warranted given falling book values, though things stabilized in Q1 for at least a few. His favorites are Two Harbors (NYSE:TWO) at 78% of book with a 12% dividend yield, and there's also American Capital Agency (NASDAQ:AGNC), Annaly Capital (NYSE:NLY), Chimera Investment (NYSE:CIM), and MFA Financial (NYSE:MFA).
- BDCs, says Ryan Lynch, have been stung by credit fears and trade at an average 87% of book value. His favorites - Ares Capital (NASDAQ:ARCC) and Hercules Capital (NYSE:HTGC) - both yield near 10%.
- Property & casualty insurers have high "cash-on-cash returns" thanks to share buybacks, says Meyer Shields, with Hartford (NYSE:HIG) and AIG standing out on that front. His favorite stocks, however, are lower yielders like Allstate (NYSE:ALL), National General (NASDAQ:NGHC), and XL Group (NYSE:XL).
- KBW also offers a basket of high yielders through the PowerShares KBW High Dividend Yield Financial ETF (NYSEARCA:KBWD). The fund currently yields 9%, and is higher by 20% in the past three months.
- Source: Barron's
Thu, May 5, 4:11 PM
- AIG hopes to raise about $700M-$800M at a $4B valuation in a public offering for its mortgage insurance unit, according to Bloomberg.
- United is the largest mortgage insurer by market share in the country. Second-place Radian stock's is lower by 8% YTD. AIG recently said the operation has a book value of $3.28B, so a $4B valuation would be about 1.2x book vs. Radian which trades for roughly right at book.
Thu, May 5, 11:13 AM
- Citing execution challenges as the insurer strives to meet 2017 goals (roughly 9% ROE among them), Morgan Stanley's Kai Pan resumes coverage of AIG (AIG +0.2%) with an Equalweight rating and $63 price target (15% upside).
- What AIG might need to do to reach that ROE goal would be a six-point improvement in the P&C core loss ratio, $1.6B in cot savings, and $25B in capital returns.
- Improving the core loss ratio that much could prove tough, says Pan, given declining P&C pricing, and while management has more control over cost savings, cutting staff as much as needed could hurt operations.
- As for whether the company can earn enough money to meet that capital return requirement, Pan says lower-for-longer interest rates, moving money out of hedge funds, and potential life retransactions could make things difficult.
Tue, May 3, 9:43 AM
- The AIG miss wasn't big surprise as it's old news that insurers' investments didn't perform well in Q1, says Citi's Todd Bault. Excluding items, the company would have earned $1.24 per share in Q1 (vs. the reported $0.65), topping estimates. He keeps his Buy rating and $69 price target.
- Credit Suisse's Ryan Tunis and Crystal Lu figure normalized EPS was $1.16 - inline with their estimates. They're bumping their 2017 EPS estimate to $5.61 from $5.52, and maintaining 2018 at $6.48.
- While the big loss on the insurer's alternative investment portfolio is a sign of too much volatility, the team notes AIG is exiting a large portion of its hedge fund book over the next few quarters, and Q2 hedge fund returns are likely to be quite a bit better than Q1.
- Ryan Tunis is ranked 2,613 out of 3,911 analysts on TipRanks.
- Previously: AIG stung by weak investment results; down 3% AH (May 2)
- Shares are lower by 2.4% in early action.
Mon, May 2, 4:54 PM
American International Group, Inc. operates as a global insurance company, which provides property casualty insurance, life insurance, retirement products, mortgage insurance and other financial services. Its offerings include products and services that help businesses and individuals protect... More
Industry: Property & Casualty Insurance
Country: United States
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