Fri, Feb. 19, 11:36 AM
- Digging through this week's 13F filings, Evercore ISI's Pankal Patel and team attempt to separate the holdings of hedge funds and other active managers.
- What they found were that institutions (active managers) were most overweight Wells Fargo (NYSE:WFC), IBM, and Coca-Cola (NYSE:KO). Two new names on the overweight short-list: Level 3 Communications (NYSE:LVLT) and Zimmer Biomet (NYSE:ZBH).
- Hedge funds, on the other hand, were most overweight Time Warner Cable (NYSE:TWC), Priceline (NASDAQ:PCLN), and Netflix (NASDAQ:NFLX). Hedge funds also added to holdings of AIG, Humana (NYSE:HUM), Alphabet (GOOG, GOOGL), and EMC during Q4.
- Also of interest: While consumer discretionary stocks (NYSEARCA:XLY) continue to be the top over-weighted sector for hedge funds, they pulled back from those names considerably during the quarter, and added to tech (NYSEARCA:XLK) in a big way. They also added to their underweight in the consumer staples stocks (NYSEARCA:XLP).
Tue, Feb. 16, 10:26 AM
- The trend of "modular finance" in which technology forces financial firms to be best of breed for each product and cuts the advantage of being "full service" hasn't spread to insurance, says Citi's Todd Bault, noting the interconnected and hard-to-automate nature of the industry.
- "While it is clear that P&C insurance fails modularity in several ways (e.g. business is sold in programs, not lines of business), AIG superficially seems modular (Life vs. P&C), but has an extensive history of interconnectedness that is a bigger problem than it seems."
- What the insurance industry (and AIG) may need, says Bault, is a tech firm like Alphabet (GOOG, GOOGL) teaming with an investment bank to buy AIG and turn it into an insurance FinTech lab.
Fri, Feb. 12, 3:51 PM
- Investors are responding positively to an earnings miss at AIG (AIG +5.1%), considering the company has capitulated to Carl Icahn in their battle and avoided (for the moment) a proxy fight by naming his rep to its board.
- The company added Samuel Merksamer, a managing director at Icahn Capital, along with John Paulson in expanding its board to 16 seats. Icahn has threatened a proxy fight with a push to split the insurance giant into three smaller companies. ""We continue to believe that smaller and simpler is better," Icahn says.
- It may not be the end of the backroom fighting, though. Analyst Meyer Shields calls Icahn's strategy "incredibly difficult to achieve." Meanwhile, Sandler O'Neill's Paul Newsome says there's more tussling ahead: "If anything, it will continue behind the scenes rather than in public."
- The company said today it plans to move about half of an $11B investment out of hedge fund investments -- mainly into investment-grade bonds and commercial mortgage loans.
- The company doesn't have staff that deals in equities, so hedge funds with stock-based approaches are mostly likely to be the ones standing after the company relocates billions in investment.
- After hitting a 52-week low of $50.38 yesterday, shares are up 5.1% today.
- Previously: AIG misses earnings with bigger loss; boosts dividend, buyback (Feb. 11 2016)
- Previously: AIG nominates Paulson, Icahn's Merksamer to board (Feb. 11 2016)
Thu, Feb. 11, 4:39 PM
- AIG (AIG -3.6%) has turned slightly down after hours, -0.2%, as it missed earnings expectations amid declining ROI, and boosted shareholder returns via the dividend and buyback program.
- It posted an after-tax operating loss of $1.3B ($1.10/share), vs. a year-ago operating income of $1.4B ($0.97/share). AIG pointed to "adverse prior year loss reserve development, and lower returns on alternative investments."
- In the face of Carl Icahn's press to split into three companies, AIG has announced plants to create separate operating and legacy portfolios (the better to highlight ROE in the Operating Portfolio) and says it expects to provide additional disclosures by the end of the year.
- Book value per share (excluding accumulated other comprehensive income) was $72.97, up 4.3% Y/Y.
- It's authorized buybacks of up to $5B; combined with remaining authorization, that brings its authority to $5.8B. It also increased the dividend 14%, to $0.32 quarterly.
- Press release
- Previously: AIG nominates Paulson, Icahn'a Merksamer to board (Feb. 11 2016)
Thu, Feb. 11, 4:25 PM
Thu, Feb. 11, 4:22 PM
- Along with its earnings report, AIG (AIG -3.6%) has expanded its board to 16 seats, nominating John Paulson and Icahn associate Samuel Merksamer.
- The two will join other directors in the proxy statement for election at AIG's annual meeting.
- Chairman Douglas Steenland: "John and Samuel will bring financial and business expertise to the board, and we look forward to benefiting from their insights as we move forward with our strategy to create a leaner, more profitable and focused AIG."
Thu, Feb. 11, 4:17 PM
Wed, Feb. 10, 5:35 PM
Tue, Feb. 2, 5:02 AM
- AIG is sticking with a strategic plan that aims to streamline the company but falls far short of calls from activist Carl Icahn to break into three separate insurers focusing on life, property-casualty and mortgage coverage.
- On Monday, Icahn told Bloomberg that the alternative plan presented last week by AIG's chief executive was inadequate and that he's assembling a slate of directors to shake up the company.
- Icahn reportedly owns 42M AIG shares, making him the firm's largest activist shareholder.
- Previously: Sell-side: AIG moves not likely to appease Icahn (Jan. 26 2016)
Mon, Feb. 1, 10:10 AM
- Though taking the company's side in the Carl Icahn-led debate about whether the insurer needs to be broken up, BMO says AIG (AIG -1.5%) - in an attempt to placate restless owners - has "overpromised."
- "We see these latest goals as an expectation trap that the stock will be hard-pressed to get away from."
- BMO downgrades from Outperform to Market Perform, and cuts the price target to $62 from $68.
Tue, Jan. 26, 12:25 PM
- "While we applaud the company's making progress on these items, this strategic pivot appears less substantial than we'd have hoped--and see the company as having missed a more major opportunity," says Bernstein's Josh Stirling in a note to clients after the AIG (AIG +1.7%) conference call (Earlier: Stirling pointedly takes exception with AIG's plans)
- "We expect pushback from activist investors including Carl Icahn," says Barclays' Jay Gelb. The $25B in capital returns is above the high end of expectations of around $20M, and the cost-cutting target of $1.6B stands against a previous range of $1B-$1.5B. Hoped-for improvements in margins in P&C "seems like a stretch to us," says Gelb, who envisions the possibility of Icahn engaging in a proxy battle to unseat management.
- "The Fed is a complete red herring," says AIG CEO Peter Hancock, perhaps losing his patience with questions about why the company isn't that interested in shedding its SIFI designation. “Using the SIFI issue as a driver of strategic decisions… may be issue no. 15 on a long list."
Tue, Jan. 26, 8:37 AM
- Alongside the strategic announcements, AIG is also taking a $3.6B Q4 reserve charge to address legacy accident loss ratios. Hopefully that will be the end of it.
- Of the $25B in promised capital returns over the next two years, about one-third of that amount will come from dividends from AIG's operating subsidiaries (incl. monetization of the DTA), and $5B-$7B from divestitures (incl. the 19.9% sale of United Guaranty). Another $9B-$12B will come from life reinsurance transactions, target financial leverage, and asset allocation shift (monetize large portion of hedge fund investments).
- In some very pointed comments, Bernstein's Josh Stirling notes we're only here today talking about operational improvements in P&C because the company has failed to meet its goals for several years. Why should investors believe this plan will result in anything different?
- Presentation slides
- Previously: AIG unveils strategy - to return $25B to shareholders (Jan. 26)
- Shares +2.3% premarket
Tue, Jan. 26, 7:15 AM
- The company commits to capital returns of at least $25B over the next two years (market cap is just $68B) without compromising the utilization of the DTA; will IPO up to 19.9% of United Guaranty as a first step towards a full separation; will sell AIG Advisor Group to Lightyear Capital and PSP Investments.
- As for operations, among the changes is the creation of nine modular business units and the formation of a new legacy portfolio to hold non-strategic assets - Charlie Shamieh has been appointed Legacy CEO. In other moves, AIG has targeted expense cuts of $1.6B over two years (14% of 2015 gross operational expenses), a target of improving the commercial P&C accident year loss ratio of six percentage points, and a consolidated ROE target of about 9% by 2017.
- As for a break-up? "After careful consideration, AIG believes that a full breakup in the near term would detract from, not enhance, shareholder value ... Being a non-bank SIFI is not currently a binding constraint on return of capital."
- A conference call is set for 8 ET.
- The stock's up 0.8% premarket.
Mon, Jan. 25, 9:22 AM
- Calling AIG's plan to spin off a portion of its mortgage insurance unit (United Guaranty) "almost pointless," KBW's Meyer Shields says the company's larger issue is very poor property & casualty profitability. Further, mortgage insurer valuations have gotten significantly worse over the past two years, so a sale now would be of questionable timing.
- "We really don’t see the point of selling better-performing businesses so it can buy back more shares of the remaining underperforming businesses."
- What's more, the sale of a minority stake in United is unlikely to free even that unit from SIFI-related capital/expense requirements, says Shields. He figures United Guaranty will earn $682M pretax next year, meaning a valuation of $3.2B based on peer share prices. Prior to the recent price slump, the operation would have been valued at closer to $5B.
- Shields rates AIG an Outperform.
- The stock's lower by 1.15% premarket.
Fri, Jan. 22, 8:01 PM
- AIG -- which is capitulating in part to Carl Icahn's demands by pursuing a spinoff of its mortgage insurance business -- plans to keep a majority stake of the unit and offer shares to the public.
- It's also finalizing a sale of its broker-dealer network, a report in The Wall Street Journal says. But keeping a majority of United Guaranty means it's not quite planning to split into three, as Icahn called for.
- The mortgage insurance unit is expected to be valued at $5B-$7B, while the broker-dealer sale could come to hundreds of millions of dollars.
- CEO Peter Hancock says while he understands desire for urgent action, a breakup isn't in shareholders' best interests.
- Shares closed up 1.9% today and were flat in after-hours trading.
- Previously: Reuters: AIG to pursue spinoff of mortgage insurance unit (Jan. 22 2016)
- Previously: Icahn: AIG management credibility "all but gone" (Jan. 19 2016)
Fri, Jan. 22, 4:37 PM
- AIG plans to pursue a spinoff of its mortgage insurance business, in a move that would come as it tries to fend off Carl Icahn, Reuters reports.
- The spinoff of the business, which accounted for 7.4% of AIG's pre-tax operating income in the first nine months of 2015, may not be enough to appease Icahn, who is calling for AIG to break up into three separate businesses.
- AIG is expected to discuss the future of the mortgage insurance business on Tuesday, when it releases its strategic plan.
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
Other News & PR