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 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, 4:29 PM
- Q1 operating income of $773M or $0.65 per share vs. $1.7B and $1.22 one year ago. Investments took a hit of $0.48 per share in this year's Q1.
- $3.5B of stock bought back during quarter and $173M of warrants (along with $363M of dividends). From the end of Q1 until today, the company bought back another $870M of stock.
- Property Casualty operating income of $720M down 38% Y/Y. Net premiums written of $4.3B down 15%. Net premiums earned of $4.7B down 5%. Net investment income of $577M down 44%. Adjusted combined ratio of 93.2% improves a hair. Cat losses of $222M up 213%.
- Mortgage Guaranty operating income of $163M up 12% Y/Y.
- Consumer Insurance operating income of $461M down 42%, with investment income of $1.3B down 17%.
- Excluding forex impact, expenses fell 5% Y/Y.
- Conference call tomorrow at 8 ET
- Previously: American International Group misses by $0.35 (May 2)
- AIG -3% after hours
Thu, Mar. 31, 7:59 AM
- AIG's mortgage insurance unit filed for an IPO last night, listing a placeholder amount of $100M to be raised. The operation had just shy of $1B in revenue in 2015, and net income of $360M.
- The expected move is part of management's plans to answer activist demands without going through a full breakup of the company.
- Updated investor presentation
- Shares +1.95% premarket
Wed, Mar. 30, 12:32 PM
- "Management possesses an understanding of its challenges and the resolve to improve returns that heretofore was lacking," says Janney's Larry Greenberg, upgrading AIG (AIG +2%) to Buy from Neutral after meeting with executives at the insurer. "It also appears that investor expectations have been significantly reduced."
- Greenberg and team left the meeting with a higher level of confidence in the quality of the expected underwriting improvement, though not enough yet to boost 2016 or 2017 estimates. "Operating improvements will likely be uneven over the next couple of years and the company will certainly face a number of earnings headwinds, such as reduced investment income from its various restructuring activities."
- Previously: Prudential and AIG on the move as MetLife wins SIFI case (March 30)
- Previously: AIG gives in to Icahn on pay, upgraded at Janney (March 30)
Wed, Mar. 30, 10:54 AM
- Unlike MetLife, Prudential (PRU +3.5%) and AIG (AIG +2.2%) chose to accept, rather than try and fight The Man over being labeled as systemically important. That's not stopping them from joining in MetLife's rally today as a judge - noting MetLife is already dealing with regulators in 50 states - rescinds the federal government's layering of new rules on top of that.
- Previously: MetLife flies as judge shoots down SIFI label (March 30)
Wed, Mar. 30, 8:42 AM
- Under pressure from Carl Icahn, AIG abandons the use of CDS spreads as a measure for long-term performance - and thus a measure for incentive pay - for its management team. The long-term incentive starting this year will likely be based on the insurer's total returns vs. peers, says the company.
- Icahn earlier this year complained that tying executive pay to CDS would discourage management from wanting to split the company.
- In other news, AIG is the recipient of an upgrade to Buy from Janney Capital.
- Shares +1.15% premarket
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)
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
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)
Tue, Jan. 19, 8:56 AM
- What little credibility management still has will be lost, says Icahn, if, as he suspects, the long-awaited "strategic update" coming on the 26th offers only incremental changes like small-scale asset sales and modest cost-cutting.
- Icahn's open letter to AIG board
- He notes with some hope Chairman Doug Steenland's promise to listen to shareholders should they disagree with management's plan.
- Getting back to management, Ichan accuses the team of either purposely misleading investors or being negligently uninformed regarding the feasibility of his break-up plan.
- Higher earlier in the premarket amid a general market bounce, the stock is now flat.
- Previously: AIG gets frisky in commercial property (Jan. 19)
Wed, Jan. 13, 7:39 AM
- In brushing off Carl Icahn's proposal to break the company up, AIG management contends escaping the government's systemically-important designation wouldn't necessarily be of any benefit to the company.
- MetLife (NYSE:MET) sees things differently, and last night announced its plan to sell or otherwise spin off much of its U.S. retail operation, with CEO Steven Kandarian saying the SIFI label and tighter capital requirements could put the business under "significant competitive disadvantage."
- "This announcement further crystallizes the compliance and operational burden of the SIFI tag, which is likely to intensify calls for AIG to consider embracing a strategic shift resulting in de-designation," says Compass Point's Isaac Boltansky.
- Met is higher by 6.9% premarket, and AIG by 0.9%
- "The news will only intensify AIG's widely reported activists' pressure," says KBW's Meyer Shields. AIG CEO Peter Hancock has set a Jan. 26 meeting to lay out his strategy.
- Previously: MetLife up sharply on plan to separate U.S. retail operations (Jan. 12)
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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