vinod1 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" It goes nicely with another tag "Who knows more about risk than the company which has the largest annual loss in history - AIG" :) Link to comment Share on other sites More sharing options...
berkshiremystery Posted October 3, 2012 Share Posted October 3, 2012 Third Point’s Loeb Adds to AIG Stake, Sees ‘Upside’ Oct. 3, 2012 http://www.bloomberg.com/news/2012-10-03/third-point-s-loeb-adds-to-aig-stake-sees-significant-upside-.html?cmpid=yhoo Daniel Loeb’s $9.3 billion Third Point LLC hedge fund increased its stake in American International Group Inc. (AIG) last quarter as the U.S. government sold shares in the insurer. AIG shares have a “significant upside,” the fund said today in a letter to investors of the New York-based firm. ----------------- From Daniel Loeb's Third Point 3rd qtr letter... We continued to accumulate AIG shares in Treasury’s offerings in the second and third quarters, as well as in the open market, considering it a cheap restructured equity.... ....In December, AIG’s lockup in its listed, non-core Asian life insurance business, AIA, will expire, allowing the company to monetize its unencumbered 13.7% interest worth some USD $6.1 billion at recent market valuations.... ...Treasury’s ultimate sale of its remaining 16% stake in AIG will serve as a critical catalyst for the company, allowing initiation of a dividend, a change in management’s compensation structure to a more standard incentive-based bonus payout model, and the removal of the overhang” of Treasury ownership. Given these multiple paths to value creation, we believe AIG’s current valuation at ~10x consensus 2013 earnings and 0.5x pro forma tangible book value of $65 per share has significant upside from these levels. full partnership letter to read: http://www.thirdpointpublic.com/wp-content/uploads/2012/10/Third-Point-Q3-2012-Investor-Letter-TPOI.pdf Link to comment Share on other sites More sharing options...
MrB Posted October 6, 2012 Share Posted October 6, 2012 Mitsubishi buying Aircraft leasing business off Oaktree for $1.3Bn http://www.bloomberg.com/news/2012-10-04/mitsubishi-ufj-lease-to-buy-jackson-square-for-1-3-bln.html?cmpid=yhoo 1.8x BV For reference ILFC's BV is $7.8Bn Details below (for better formatting see the attached) Fiscal Year Year Ended December 2009 Year Ended December 2010 Year Ended December 2011 Consolidated Net Assets - 220.4 722.0 Consolidated Total Assets - 516.1 2,739.5 Consolidated Sales - 20.3 148.4 Consolidated Net Income - ▲6.8 25.2Mits-Oak.pdf Link to comment Share on other sites More sharing options...
ShahKhezri Posted October 6, 2012 Share Posted October 6, 2012 ILFC was bought out at ~1.8x back in the 80's. However, they have taken write-downs over the past year to clean up their books. AER, FLY, AL all trade below book. That's why BM has probably shied away from IPO. I imagine that if AIG could IPO ILFC at ~1x...they would. Link to comment Share on other sites More sharing options...
Guest rimm_never_sleeps Posted October 6, 2012 Share Posted October 6, 2012 i believe aig leasing is also stuck with an old fleet. Link to comment Share on other sites More sharing options...
MYDemaray Posted October 8, 2012 Share Posted October 8, 2012 They should sell ILFC to all that pent-up private equity cash that we've been reading about...get a nice competitive bid situation going among the KKRs & Blackstones of the world... Link to comment Share on other sites More sharing options...
Shawn Posted October 9, 2012 Share Posted October 9, 2012 Swiss Re & Munich Re >>>>>> AIG Link to comment Share on other sites More sharing options...
JRH Posted October 9, 2012 Share Posted October 9, 2012 I believe Benmosche has recently commented to the effect of, "the market is not ready for an ILFC IPO". I assume it was shopped and they weren't going to get the price they wanted for it. I think it's just another sign of good management that they are willing to wait. Link to comment Share on other sites More sharing options...
berkshiremystery Posted October 10, 2012 Share Posted October 10, 2012 At least Berkshire's General Re thinks that AIG is some good place to hire people. http://www.bloomberg.com/news/2012-10-09/buffett-s-general-re-hires-aig-s-yu-for-risk-management-post.html Link to comment Share on other sites More sharing options...
berkshiremystery Posted October 10, 2012 Share Posted October 10, 2012 Insurance Shares Could See a Book Value Surge Oct. 9, 2012 - TheStreet http://www.thestreet.com/story/11732047/1/insurance-shares-could-see-a-book-value-surge.html?puc=yahoo&cm_ven=YAHOO Insurance company book values are expected to rise by an average of 4.7% following third quarter earnings presentations as a result of strong bond and equity market gains, according to a report published Tuesday by Sandler O'Neill.... Sandler analysts predict a 14.1% rise for AIG's book value, driven primarily by the company's participation in two rounds of share repurchases from Treasury. The rules of accounting are such that buying back shares when your shares trade below book value adds to book value per share. "You could argue that the intrinsic value may not change, but the reported book value would increase--assuming stable marks in the market, obviously. It's just math," says Sander analyst Paul Newsome, one of the authors of the report. Link to comment Share on other sites More sharing options...
MrB Posted October 10, 2012 Share Posted October 10, 2012 Insurance Shares Could See a Book Value Surge Oct. 9, 2012 - TheStreet http://www.thestreet.com/story/11732047/1/insurance-shares-could-see-a-book-value-surge.html?puc=yahoo&cm_ven=YAHOO Insurance company book values are expected to rise by an average of 4.7% following third quarter earnings presentations as a result of strong bond and equity market gains, according to a report published Tuesday by Sandler O'Neill.... Sandler analysts predict a 14.1% rise for AIG's book value, driven primarily by the company's participation in two rounds of share repurchases from Treasury. The rules of accounting are such that buying back shares when your shares trade below book value adds to book value per share. "You could argue that the intrinsic value may not change, but the reported book value would increase--assuming stable marks in the market, obviously. It's just math," says Sander analyst Paul Newsome, one of the authors of the report. Intrinsic value does change, it reduces, because you are laying out cash. However, since you are reducing the equity claims on future cash flows by more ($1 for 50 cents) you are increasing the intrinsic value per share. Ditto for book value. For example: If A and B each own 10 shares in the following company Assets: 120 (Cash) Liabilities:100 (Bank loan) Equity: 20 (net cash) Equity/share: $1 Intrinsic value: $20 Intrinsic value (let's assume 0% discount rate to keep it simple)/share: $1 A buys out B at 0.5 of book Assets: 115 (Cash) Liabilities:100 (Bank loan) Equity: 15 (net cash) Equity/share: $1.5 Intrinsic value: $15 Intrinsic value (let's assume 0% discount rate to keep it simple)/share: $1.5 Change in Intrinsic value: -25% Change in Intrinsic value/share: +50% It's just math....and a bit of common sense It's just math Link to comment Share on other sites More sharing options...
racemize Posted October 10, 2012 Share Posted October 10, 2012 yeah, I hadn't actually realized how the buybacks, asset sales, and book value/BVPS worked until I sat down and did the math for that write-up I posted a while back. Sometimes it is worth sitting down and just doing it to confirm what you're thinking in the abstract. Link to comment Share on other sites More sharing options...
txlaw Posted October 10, 2012 Share Posted October 10, 2012 Insurance Shares Could See a Book Value Surge Oct. 9, 2012 - TheStreet http://www.thestreet.com/story/11732047/1/insurance-shares-could-see-a-book-value-surge.html?puc=yahoo&cm_ven=YAHOO Insurance company book values are expected to rise by an average of 4.7% following third quarter earnings presentations as a result of strong bond and equity market gains, according to a report published Tuesday by Sandler O'Neill.... Sandler analysts predict a 14.1% rise for AIG's book value, driven primarily by the company's participation in two rounds of share repurchases from Treasury. The rules of accounting are such that buying back shares when your shares trade below book value adds to book value per share. "You could argue that the intrinsic value may not change, but the reported book value would increase--assuming stable marks in the market, obviously. It's just math," says Sander analyst Paul Newsome, one of the authors of the report. Intrinsic value does change, it reduces, because you are laying out cash. However, since you are reducing the equity claims on future cash flows by more ($1 for 50 cents) you are increasing the intrinsic value per share. Ditto for book value. For example: If A and B each own 10 shares in the following company Assets: 120 (Cash) Liabilities:100 (Bank loan) Equity: 20 (net cash) Equity/share: $1 Intrinsic value: $20 Intrinsic value (let's assume 0% discount rate to keep it simple)/share: $1 A buys out B at 0.5 of book Assets: 115 (Cash) Liabilities:100 (Bank loan) Equity: 15 (net cash) Equity/share: $1.5 Intrinsic value: $15 Intrinsic value (let's assume 0% discount rate to keep it simple)/share: $1.5 Change in Intrinsic value: -25% Change in Intrinsic value/share: +50% It's just math....and a bit of common sense It's just math Precisely. This illustrates why buybacks are not merely returns of capital. Link to comment Share on other sites More sharing options...
berkshiremystery Posted October 10, 2012 Share Posted October 10, 2012 Buying American International Group LEAPS To Leverage A Treasury Exit Oct. 10th, 2012 - SeekingAlpha.com http://seekingalpha.com/article/915711-buying-american-international-group-leaps-to-leverage-a-treasury-exit?source=yahoo Peter Lynch gave several rules for investing and one of his rules was "Whatever the queen is selling, buy it." In this case, the Treasury is selling AIG stock. The Queen refers to the government. The Treasury has no interest in seeing AIG shares fall just after they unload their last bit of the investment. The time to buy is now. Link to comment Share on other sites More sharing options...
Uccmal Posted October 10, 2012 Share Posted October 10, 2012 In reference to the article above: It makes more sense to wait a week and buy the 2015s, or just buy the warrants. I will actually start moving my out-of-the money leaps from 2014 off my balance sheet as soon as the 2015s come out. Opportunistically, of course. I will keep the 27, 30s, and maybe 35s from 2014, likely to Jamuary 2014, but the 40s and 45s will go. Link to comment Share on other sites More sharing options...
berkshiremystery Posted October 10, 2012 Share Posted October 10, 2012 In reference to the article above: It makes more sense to wait a week and buy the 2015s, or just buy the warrants. I will actually start moving my out-of-the money leaps from 2014 off my balance sheet as soon as the 2015s come out. Opportunistically, of course. I will keep the 27, 30s, and maybe 35s from 2014, likely to Jamuary 2014, but the 40s and 45s will go. Uccmal,... I currently own the AIG common & warrants,... and had written some puts last spring. My mind is currently looking for the upcoming 2015 leaps cycle,... there I might add some big shitload ;D Link to comment Share on other sites More sharing options...
berkshiremystery Posted October 10, 2012 Share Posted October 10, 2012 AIG: Why The Market Doesn't Matter Oct. 10th, 2012 - SeekingAlpha.com http://seekingalpha.com/article/917031-aig-why-the-market-doesn-t-matter?source=yahoo Link to comment Share on other sites More sharing options...
Uccmal Posted October 10, 2012 Share Posted October 10, 2012 Mysery, Do you have a US account? Link to comment Share on other sites More sharing options...
PlanMaestro Posted October 11, 2012 Author Share Posted October 11, 2012 AIA buys ING’s Malaysian arm http://www.ft.com/intl/cms/s/0/8cbac0f0-1347-11e2-bca6-00144feabdc0.html#axzz28vmXKkOb AIA will pay $1.7bn for the Malaysian businesses of Europe’s ING in a deal that will hand the pan-Asian life assurer the leading position in that country and further extend its region-wide lead over nearest rival Prudential of the UK. … The cash price AIA has agreed for ING’s Malaysian arm amounts to 2.4 times the unit’s book value in 2011 and 1.8 times its embedded value – an insurance industry measure of the future profits available from business already written. Arjan van Veen, analyst at Credit Suisse, said that, while the headline valuation looked high, Malaysia was the jewel in ING’s crown. “To get access to the best growth markets you have to pay a premium,” he said. “But if you roll the numbers forward [to next year] and allow for the synergies AIA expects to achieve, it’s paying a similar valuation to where AIA itself is trading.” … Mark Tucker, chief executive of AIA, said the deal would bring a step change in the scale and reach of its existing Malaysian business in one of south-east Asia’s most attractive growth markets. “If you look at how this acquisition is a step change in our presence in Malaysia and put in the projected growth in Malaysia and put in the synergies we expect from the deal, as some of the analysts have done, it looks like very good value,” he said. Link to comment Share on other sites More sharing options...
mranski Posted October 12, 2012 Share Posted October 12, 2012 Price to Sales Ratio for P&C Companies http://ycharts.com/rankings/industries/Property%20&%20Casualty%20Insurance/ps_ratio?p=1&s=calc&d=asc Link to comment Share on other sites More sharing options...
berkshiremystery Posted October 12, 2012 Share Posted October 12, 2012 Mysery, Do you have a US account? Yes,... of course. Link to comment Share on other sites More sharing options...
Uccmal Posted October 12, 2012 Share Posted October 12, 2012 Price to Sales Ratio for P&C Companies http://ycharts.com/rankings/industries/Property%20&%20Casualty%20Insurance/ps_ratio?p=1&s=calc&d=asc What does this mean? Link to comment Share on other sites More sharing options...
FrankArabia Posted October 12, 2012 Share Posted October 12, 2012 price to sales is not a meaingful measure for insurance.....a p/s ratio may be high due to a company not writing policies in bad times.... Link to comment Share on other sites More sharing options...
mranski Posted October 12, 2012 Share Posted October 12, 2012 What does this mean? Not sure it means much. On this admittedly questionable valuation metric I was surprised that Aig is not as screamingly cheap as it is on a book value basis. Link to comment Share on other sites More sharing options...
MrB Posted October 12, 2012 Share Posted October 12, 2012 AIA buys ING’s Malaysian arm http://www.ft.com/intl/cms/s/0/8cbac0f0-1347-11e2-bca6-00144feabdc0.html#axzz28vmXKkOb AIA will pay $1.7bn for the Malaysian businesses of Europe’s ING in a deal that will hand the pan-Asian life assurer the leading position in that country and further extend its region-wide lead over nearest rival Prudential of the UK. … The cash price AIA has agreed for ING’s Malaysian arm amounts to 2.4 times the unit’s book value in 2011 and 1.8 times its embedded value – an insurance industry measure of the future profits available from business already written. Arjan van Veen, analyst at Credit Suisse, said that, while the headline valuation looked high, Malaysia was the jewel in ING’s crown. “To get access to the best growth markets you have to pay a premium,” he said. “But if you roll the numbers forward [to next year] and allow for the synergies AIA expects to achieve, it’s paying a similar valuation to where AIA itself is trading.” … Mark Tucker, chief executive of AIA, said the deal would bring a step change in the scale and reach of its existing Malaysian business in one of south-east Asia’s most attractive growth markets. “If you look at how this acquisition is a step change in our presence in Malaysia and put in the projected growth in Malaysia and put in the synergies we expect from the deal, as some of the analysts have done, it looks like very good value,” he said. That raises an eyebrow. Link to comment Share on other sites More sharing options...
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