MrB Posted September 25, 2012 Share Posted September 25, 2012 New Sigma report - Facing the Interest Rate Challenge http://media.swissre.com/documents/sigma4_2012_en.pdf Link to comment Share on other sites More sharing options...
Uccmal Posted September 25, 2012 Share Posted September 25, 2012 What leaps do you hold, if you don't mind me asking? I have some warrants, and am considering common, but leaps intrigues me, as the leverage would juice up the returns quite a bit Okay: All 2014s: in order of position size: 40s, 35s, 30s, 45s, 27s; The 27s and 30s I bought when the stocked dipped in the second Q. FWIW: I wont be buying any more 2014s. When the 2015s arrive I will slowly roll over. However, if the stock price cooperates and leaps move deep into the money, I wont be as likely to sell them. I will keep them until January 2014, a few days prior to expiry to move out the tax man from 2012-13 to 2014. If AIG adds a reasonable dividend I will convert some to common - up to a couple of thousand shares Link to comment Share on other sites More sharing options...
hardincap Posted September 25, 2012 Share Posted September 25, 2012 Anyone else bothered by the fact that Benmosche set expectations for buybacks very high on CNBC, then badly failed to meet it? He went on CNBC and said they would have roughly 23bn in capital available for buybacks, from ML3 sales, AIA, IFLC, etc. Yet he's bought back only 5bn so far, choosing to sell only 2bn of AIA and using ML3 proceeds to buy assets instead of repurchasing stock. Granted he hasnt gotten a chance to IPO IFLC yet, but still he could have done much more with AIA and ML3 proceeds. I would have liked him to sell all of AIA and repurchase stock given where its trading relative to book. Link to comment Share on other sites More sharing options...
racemize Posted September 25, 2012 Share Posted September 25, 2012 Anyone else bothered by the fact that Benmosche set expectations for buybacks very high on CNBC, then badly failed to meet it? He went on CNBC and said they would have roughly 23bn in capital available for buybacks, from ML3 sales, AIA, IFLC, etc. Yet he's bought back only 5bn so far, choosing to sell only 2bn of AIA and using ML3 proceeds to buy assets instead of repurchasing stock. Granted he hasnt gotten a chance to IPO IFLC yet, but still he could have done much more with AIA and ML3 proceeds. I would have liked him to sell all of AIA and repurchase stock given where its trading relative to book. are you sure he said buybacks in particular? He likes to use the term "capital management", generally, which he classifies asset buying and buybacks under. I suspect there will still be a fair amount of buybacks next year though, after stress tests come through. Link to comment Share on other sites More sharing options...
Mephistopheles Posted September 25, 2012 Share Posted September 25, 2012 I get so angry when CEOs don't buy back enough shares when the stock is so obviously cheap, and instead talk about paying dividends or purchasing assets. Another example of course is DELL. Link to comment Share on other sites More sharing options...
hardincap Posted September 25, 2012 Share Posted September 25, 2012 Anyone else bothered by the fact that Benmosche set expectations for buybacks very high on CNBC, then badly failed to meet it? He went on CNBC and said they would have roughly 23bn in capital available for buybacks, from ML3 sales, AIA, IFLC, etc. Yet he's bought back only 5bn so far, choosing to sell only 2bn of AIA and using ML3 proceeds to buy assets instead of repurchasing stock. Granted he hasnt gotten a chance to IPO IFLC yet, but still he could have done much more with AIA and ML3 proceeds. I would have liked him to sell all of AIA and repurchase stock given where its trading relative to book. are you sure he said buybacks in particular? He likes to use the term "capital management", generally, which he classifies asset buying and buybacks under. I suspect there will still be a fair amount of buybacks next year though, after stress tests come through. yes, positive. why wait until next year when the stock is trading at 50% book now?? and the fact that he set expectations so high and failed to meet it makes me question not only his integrity but his intentions for buybacks next year. Link to comment Share on other sites More sharing options...
Guest rimm_never_sleeps Posted September 25, 2012 Share Posted September 25, 2012 chicken or egg. lots of people think like you did and want it all now. so they sold it off. and probably won't buy it because ceo didn't do what they wanted. so that will keep the stock cheap for when he actually has all his ducks in a row to buy the shares. if you read berkowitz he is already two years ahead of plan. investors can surely be an impatient constituent. Link to comment Share on other sites More sharing options...
racemize Posted September 25, 2012 Share Posted September 25, 2012 Anyone else bothered by the fact that Benmosche set expectations for buybacks very high on CNBC, then badly failed to meet it? He went on CNBC and said they would have roughly 23bn in capital available for buybacks, from ML3 sales, AIA, IFLC, etc. Yet he's bought back only 5bn so far, choosing to sell only 2bn of AIA and using ML3 proceeds to buy assets instead of repurchasing stock. Granted he hasnt gotten a chance to IPO IFLC yet, but still he could have done much more with AIA and ML3 proceeds. I would have liked him to sell all of AIA and repurchase stock given where its trading relative to book. are you sure he said buybacks in particular? He likes to use the term "capital management", generally, which he classifies asset buying and buybacks under. I suspect there will still be a fair amount of buybacks next year though, after stress tests come through. yes, positive. why wait until next year when the stock is trading at 50% book now?? and the fact that he set expectations so high and failed to meet it makes me question not only his integrity but his intentions for buybacks next year. I guess I'm not sure which one you are talking about, see this from early August (from Mr. B): Good interview with Ben. Very interesting comments on Greenberg around the 5min mark and good discussion on the buyback and general business. http://video.cnbc.com/gallery/?video=3000106942 but i want to ask you this, yesterday, former aig executive ned klunin was on squawk box, i want you to hear what he had to say and get your take on it. would it have still occurred with hank greenberg there? i thought about this carefully, and i've had some time, and in my ion, it would not have happened. we would have had some losses, perhaps, but that portfolio would not have been allowed to build in the way it did. do you agree with that? i believe if hank greenberg were here, things would not have grown the way it did and it would have been kept under control. most of the mortgage losses were for in '06 and '07. some of the growth in fp, again, was after he left. so i think when the issue started to -- look, there's no question -- he is a decisive manager. when he looks at issues and acts on it immediately, i think there would have been more action around those issues, and i think it's an unfortunate thing. i tend to agree, i had a little chat with eliot spitzer about this issue recently, actually. once we can do that it will give us additional capital for capital management which is, by the way, not only buying back shares which everyone is focussing on, but you saw we did a small acquisition, we'll continue to look for acquisitions, because buying business where's we get earnings growth is better with the right returns and not necessarily a one timeshare buy back. we're looking at growth opportunities, and we have a excess capital well buy back the shares. you find yourself in an interesting place right now because you want to be raising the capital, but you're doing it at, in some cases, the worst possible time because you're not getting the price you could be getting. we're not selling until we get our price. Regarding current buybacks, they are now under the fed, so I don't think they can do any more buybacks until stress tests. Link to comment Share on other sites More sharing options...
cayale Posted September 25, 2012 Share Posted September 25, 2012 Anyone else bothered by the fact that Benmosche set expectations for buybacks very high on CNBC, then badly failed to meet it? He went on CNBC and said they would have roughly 23bn in capital available for buybacks, from ML3 sales, AIA, IFLC, etc. Yet he's bought back only 5bn so far, choosing to sell only 2bn of AIA and using ML3 proceeds to buy assets instead of repurchasing stock. Granted he hasnt gotten a chance to IPO IFLC yet, but still he could have done much more with AIA and ML3 proceeds. I would have liked him to sell all of AIA and repurchase stock given where its trading relative to book. are you sure he said buybacks in particular? He likes to use the term "capital management", generally, which he classifies asset buying and buybacks under. I suspect there will still be a fair amount of buybacks next year though, after stress tests come through. yes, positive. why wait until next year when the stock is trading at 50% book now?? and the fact that he set expectations so high and failed to meet it makes me question not only his integrity but his intentions for buybacks next year. They have repurchased a lot of stock this year and every next share is accretive to TBV. That said, he discusses acquisitions in the right way, based on getting the right return, not something silly like earnings accretion, revenue growth, etc. I have trouble quibbling with management's pledges to date in terms of focusing the company and selling off non-core assets. Look at where this thing was five years ago. Now, it's a plain vanilla, life and P&C carrier- virtually unlevered and ridiculously less complicated. Management has done exactly what they said they'd do in terms of righting the ship. We now have to find out how good they are with the pen (or the lack thereof when the markets dictate). Link to comment Share on other sites More sharing options...
MrB Posted September 25, 2012 Share Posted September 25, 2012 Anyone else bothered by the fact that Benmosche set expectations for buybacks very high on CNBC, then badly failed to meet it? He went on CNBC and said they would have roughly 23bn in capital available for buybacks, from ML3 sales, AIA, IFLC, etc. Yet he's bought back only 5bn so far, choosing to sell only 2bn of AIA and using ML3 proceeds to buy assets instead of repurchasing stock. Granted he hasnt gotten a chance to IPO IFLC yet, but still he could have done much more with AIA and ML3 proceeds. I would have liked him to sell all of AIA and repurchase stock given where its trading relative to book. Two things. 1. Are you sure about your facts? a. When did he say $23Bn and b. has he only spent 5Bn thus far? 2. What is your benchmark for NOT "badly failed to meet"? Link to comment Share on other sites More sharing options...
PlanMaestro Posted September 25, 2012 Author Share Posted September 25, 2012 Very interesting report. Thanks MrB. New Sigma report - Facing the Interest Rate Challenge http://media.swissre.com/documents/sigma4_2012_en.pdf Link to comment Share on other sites More sharing options...
treasurehunt Posted September 25, 2012 Share Posted September 25, 2012 New Sigma report - Facing the Interest Rate Challenge http://media.swissre.com/documents/sigma4_2012_en.pdf Thanks for the link, MrB. I found the report well-written and educational. Link to comment Share on other sites More sharing options...
Rabbitisrich Posted September 25, 2012 Share Posted September 25, 2012 Anyone else bothered by the fact that Benmosche set expectations for buybacks very high on CNBC, then badly failed to meet it? He went on CNBC and said they would have roughly 23bn in capital available for buybacks, from ML3 sales, AIA, IFLC, etc. Yet he's bought back only 5bn so far, choosing to sell only 2bn of AIA and using ML3 proceeds to buy assets instead of repurchasing stock. Granted he hasnt gotten a chance to IPO IFLC yet, but still he could have done much more with AIA and ML3 proceeds. I would have liked him to sell all of AIA and repurchase stock given where its trading relative to book. Two things. 1. Are you sure about your facts? a. When did he say $23Bn and b. has he only spent 5Bn thus far? 2. What is your benchmark for NOT "badly failed to meet"? That may have been an extrapolation from estimated $23 billion in non-core assets: http://www.ft.com/cms/s/0/99bf9bc2-7bee-11e1-af2b-00144feab49a.html There are still some disposals ahead. Mr Benmosche estimated he could raise $23bn by selling ILFC for $7.5bn, shares in AIA, AIG’s former Asian subsidiary, for $8bn, and AIG’s share of the Maiden Lane III portfolio – of assets held at the Federal Reserve Bank of New York and shared between the government and the insurance group – for $7bn. Link to comment Share on other sites More sharing options...
compoundinglife Posted September 25, 2012 Share Posted September 25, 2012 What leaps do you hold, if you don't mind me asking? I have some warrants, and am considering common, but leaps intrigues me, as the leverage would juice up the returns quite a bit Okay: All 2014s: in order of position size: 40s, 35s, 30s, 45s, 27s; The 27s and 30s I bought when the stocked dipped in the second Q. FWIW: I wont be buying any more 2014s. When the 2015s arrive I will slowly roll over. However, if the stock price cooperates and leaps move deep into the money, I wont be as likely to sell them. I will keep them until January 2014, a few days prior to expiry to move out the tax man from 2012-13 to 2014. If AIG adds a reasonable dividend I will convert some to common - up to a couple of thousand shares I was looking at the leaps today, specifically the 2014 $45 strike (same strike as warrants), they seem more expensive than the warrants. Assuming you have 1 year of time (a little more actually) and the cost is $1.70. 1.70 x 8 years is 13.60 which is more than the warrants are trading currently and they offer none of the anti dilution protections that the warrants do, granted those likely wont get you much between now and Jan. 2014. When you bought your positions do you know what the cost of the leaps were in comparison to the warrants? I am long the warrants as of yesterday. A year ago I would not have touched AIG but the progress has been great I feel like I can see the light at the end of tunnel now, although it could be a long tunnel. Link to comment Share on other sites More sharing options...
Hielko Posted September 25, 2012 Share Posted September 25, 2012 You can't just multiply the amount of time till expiry to compare the value of two different options. Time value decay (theta) is not linear. Link to comment Share on other sites More sharing options...
Uccmal Posted September 25, 2012 Share Posted September 25, 2012 You can't just multiply the amount of time till expiry to compare the value of two different options. Time value decay (theta) is not linear. That is correct. It is also impossible to assess for a 7 year option. They are just a proxy for the common, hopefully with very low risk. When I bought the 45s I had less conviction than I do now. Since then I bought the warrants, and some common. Treasury has reduced their position two or three times in the interim. Link to comment Share on other sites More sharing options...
compoundinglife Posted September 25, 2012 Share Posted September 25, 2012 You can't just multiply the amount of time till expiry to compare the value of two different options. Time value decay (theta) is not linear. Thanks for pointing that out. I am aware that pricing options is more complex than that but I was trying to quickly get a rough idea. If anything wouldn't the time value progress up for a while on the longer dated options? Considering that the shorter (1 year) are closer to the point where decay rapidly I would expect the warrants to be more expensive than they are vs the leaps. It still seems to me at those prices the warrants are a better deal. But I only know enough about options to be dangerous. Link to comment Share on other sites More sharing options...
MrB Posted September 27, 2012 Share Posted September 27, 2012 You must be referring to Hartford and Metlife (at least the big caps I have been looking at). Two things, those businesses haven't undergone the major restructuring like AIG so future prospects may resemble the past a bit more though my assertion is speculative. Metlife is not selling for as cheap on a TBV basis but Hartford is. Hartford is selling for significantly cheaper but I believe Hartford was undergoing more problems on the VA side and still faces potential losses from that hence the discount. More research to follow. Starting separate thread ...http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/hartford/new/#new Link to comment Share on other sites More sharing options...
Green King Posted September 27, 2012 Share Posted September 27, 2012 New Sigma report - Facing the Interest Rate Challenge http://media.swissre.com/documents/sigma4_2012_en.pdf Thank i liked it very much Link to comment Share on other sites More sharing options...
mankap Posted September 27, 2012 Share Posted September 27, 2012 The link below refers to UBS analyst report. It says that AIG is expected to increase its book value by 10%/year through 2015. The book value of AIG could be 90-100 by 2015.Even if AIG trades at 20% discount to book in 2016, still warrants look very attractive. http://www.istockanalyst.com/finance/story/6062876/american-international-group-aig-on-the-path-towards-improved-returns Link to comment Share on other sites More sharing options...
cayale Posted September 28, 2012 Share Posted September 28, 2012 Assuming no share repurchase at less than book, aig would have to either reinvest 100% of earnings at 10% roe's or lever up to achieve 10% book value growth, no? Seems a bit aggressive unless p/bv is going to remain depressed. Link to comment Share on other sites More sharing options...
mankap Posted September 28, 2012 Share Posted September 28, 2012 I think UBS is assuming some share buyback .The reports says that UBS expects share buyback to start in 2H 2013. Link to comment Share on other sites More sharing options...
MrB Posted October 2, 2012 Share Posted October 2, 2012 New Logo. Why not just keep the old one? http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=multimedia_detail&eid=50427702&newsLang=en Link to comment Share on other sites More sharing options...
MrB Posted October 2, 2012 Share Posted October 2, 2012 AIG says being considered for more regulation (RTRS) Today at 08:09 Oct 2 (Reuters) - American International Group Inc (AIG.N) is being considered for more regulatory oversight by a federal panel looking at institutions crucial to the financial system, the insurer said on Tuesday. AIG said it has been notified by the Financial Stability Oversight Council that it is being considered for designation as a "systemically important financial institution" under the Dodd-Frank reform laws. (Reporting By Ben Berkowitz; Editing by Gerald E. McCormick) ((Ben.Berkowitz@thomsonreuters.com)(+1-617-856-4334)(Reuters Messaging: ben.berkowitz.thomsonreuters.com@reuters.net)(Twitter: @BerkowitzRtrs)) Keywords: AIG OVERSIGHT/ Link to comment Share on other sites More sharing options...
FrankArabia Posted October 2, 2012 Share Posted October 2, 2012 I see this as a huge positive and a stamp of approval....imagine...you can brand it like...."A systematically important insurer - AIG" Link to comment Share on other sites More sharing options...
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