AIG - American International Group

[JRH]

Bottom of page 5, that growth in book value is best described as "mouth-watering", IMO.

 

http://www.aigcorporate.com/investors/2012_November/Q32012_FinancialSupplement.pdf

 

As a ratio of book, the stock price has basically gone nowhere in the past 12 months (it was ~$45/share the Q before the first listed there).

[enoch01]

Hi

The decrease in equity from 104B to 101B is due to change in accounting for the costs.(Page 84 of 3Q 10Q)

 

http://www.aigcorporate.com/investors/2012_November/Q32012_10Q.pdf

 

As discussed in Note 2 to the Consolidated Financial Statements, AIG retrospectively adopted an accounting

standard on January 1, 2012 that amended the accounting for costs incurred by insurance companies that can be

capitalized in connection with acquiring or renewing insurance contracts.

The impact to AIG shareholders’ equity and Net income (loss) attributable to AIG previously reported in 2011

is summarized below:

AIG shareholders’ equity as previously reported $ 104,951

Impact of adoption of new standard on AIG Shareholders’ equity (3,413)

AIG shareholders’ equity as currently reported $ 101,538

 

Sorry, I thought you were talking about changes from Q2 of 2012.

[mankap]

Book value is at $68/share now. That is really good.

Now AIG is trading at almost 50% discount to book.

[Uccmal]

50% book;

9 month earnings of 4.21 - give it $5 per year. 

pe~ 7

 

Cheap for a profitable enterprise.

 

The underlying insurance business of AIG is remarkably stable now that most of the noise is gone.

[Gopinath]

What is the outstanding share count now? I see different numbers in different pages..

 

In page 3, I see 1,642 M

In page 5, I see 1,476,295,743

 

[MYDemaray]

What is the outstanding share count now? I see different numbers in different pages..

 

In page 3, I see 1,642 M

In page 5, I see 1,476,295,743

 

The larger number refers to diluted shares out, which is an average of the amount outstanding over the quarter.  It's an income statement figure.

 

The latter is the current shares outstanding, and is a balance sheet figure.  Today's figure is the 1,476 one.

 

Another tip.  The 10-Q always lists a more recent version of the shares outstanding at the beginning.  AIG filed its Q simultaneously with the announcement: "As of October 26, 2012, there were 1,476,304,497 shares outstanding of the registrant's common stock."

[MrB]

http://video.cnbc.com/gallery/?video=3000126421

Ben:

 

i think they're looking for the right time to maximize the value for america, and they'll do that when they feel they're able to accomplish that for the country. we know the treasury lockup ends on november 10th. any active discussions regarding a secondary here on this? we don't get involved in that. you know, we leave that entirely up to the u.s. treasury. they're the shareholder. to the extent we can be the facilitator, we would. our capital management program today is focused on our coverage ratios and some of our debt and ability to cover that payment. so we have a very specific capital management program for the next, i'd say, 12 to 18 months. we don't necessarily see where we would be involved in directly anything the treasury is doing at this point

[Guest rimm_never_sleeps]

clearly the fed has got them on a short leash. they need to sell that bank they own and get control of their own destiny. they can buy back a lot more stock and will.

[PlanMaestro]

we don't necessarily see where we would be involved in directly anything the treasury is doing at this point

 

Well, at least $69 BV per share is much more than I expected at this point.

[mysticdrew]

clearly the fed has got them on a short leash. they need to sell that bank they own and get control of their own destiny. they can buy back a lot more stock and will.

 

I don't think that'll help as they'll still be under fed supervision after they get deemed systemically important which is how it's looking for now.  Either way, still a compelling value opportunity IMO.

[biaggio]

we don't necessarily see where we would be involved in directly anything the treasury is doing at this point

 

Well, at least $69 BV per share is much more that I expected at this point.

 

Are you sure BV is $69

 

Benmosche also quoted in release that BV was $61. The  quoted $68 and change in BV contains some fort of income qualifier. I'd like it to be $69 rather than $61

 

I don t get why (it could be just me) why they are going out of there way to have 2 quoted BV's. It sort of like non GAAP earnings or earnings before everything else that folks warn about. Have not had a chance to read press release in detail or think about it, hoping someone here has an explanation to save time.

 

Never the less $61 or $69, AIG looks inexpensive at $35

[ECCO]

we don't necessarily see where we would be involved in directly anything the treasury is doing at this point

 

Well, at least $69 BV per share is much more that I expected at this point.

 

Are you sure BV is $69

 

Benmosche also quoted in release that BV was $61. The  quoted $68 and change in BV contains some fort of income qualifier. I'd like it to be $69 rather than $61

 

I don t get why (it could be just me) why they are going out of there way to have 2 quoted BV's. It sort of like non GAAP earnings or earnings before everything else that folks warn about. Have not had a chance to read press release in detail or think about it, hoping someone here has an explanation to save time.

 

Never the less $61 or $69, AIG looks inexpensive at $35

 

http://online.wsj.com/article/BT-CO-20121101-720787.html?mod=WSJ_FinancialServicesAndInsurance_middleHeadlines

 

Book value per share was $68.87, a 14% increase from book value per share of $60.58 at the end of the second quarter. The increase was driven in part by AIG's share buybacks from the federal government

 

Seems that the 68.87$ is the value at the end of october and it is after the 5B$ stock buyback.

 

 

[Guest rimm_never_sleeps]

clearly the fed has got them on a short leash. they need to sell that bank they own and get control of their own destiny. they can buy back a lot more stock and will.

 

I don't think that'll help as they'll still be under fed supervision after they get deemed systemically important which is how it's looking for now.  Either way, still a compelling value opportunity IMO.

 

that's why I think they might break this thing up. why should an insurance company be deemed sifi? the government couldn't regulate worth a damn last time. they won't be any better spotting the next problem.

[biaggio]

Thanks ecco

 

look on bottom of page 5 here http://www.aigcorporate.com/investors/2012_November/Q32012_FinancialSupplement.pdf

 

There appears to be BV with and without "other accumulated " earnings... I am not sure what this would be.

 

The progress from Dec 2011 quarter in both BV calculations are positive and encouraging (a lot probably related to buyback)

 

 

 

[PlanMaestro]

we don't necessarily see where we would be involved in directly anything the treasury is doing at this point

 

Well, at least $69 BV per share is much more that I expected at this point.

 

Are you sure BV is $69

 

Benmosche also quoted in release that BV was $61. The  quoted $68 and change in BV contains some fort of income qualifier. I'd like it to be $69 rather than $61

 

I don t get why (it could be just me) why they are going out of there way to have 2 quoted BV's. It sort of like non GAAP earnings or earnings before everything else that folks warn about. Have not had a chance to read press release in detail or think about it, hoping someone here has an explanation to save time.

 

Never the less $61 or $69, AIG looks inexpensive at $35

 

$61 is ex-AOCI (Page 5 supplement, bottom)

[JRH]

Are you sure BV is $69

 

Benmosche also quoted in release that BV was $61. The  quoted $68 and change in BV contains some fort of income qualifier. I'd like it to be $69 rather than $61

 

I don t get why (it could be just me) why they are going out of there way to have 2 quoted BV's. It sort of like non GAAP earnings or earnings before everything else that folks warn about. Have not had a chance to read press release in detail or think about it, hoping someone here has an explanation to save time.

 

Never the less $61 or $69, AIG looks inexpensive at $35

 

Footnote 4, page 8: "At September 30, 2012, for U.S. tax return purposes, AIG Life and Retirement had approximately $15.8 billion of gross unrealized gains in its available for sale portfolio which, if realized, can be used to reduce a portion of gross capital loss carryforwards totaling $19.7 billion."

 

Tax minutae ($10 billion tax minutae, in this case... :), I think there's nothing wrong with defaulting to the lesser of the two and assuming $61/share is more reasonable.  I know of a handful of GAAP conventions that I would rather discount than trust, for what it's worth.

 

Probably the bigger question is whether book and intrinsic value for an insurer can be expected to deviate based on prevailing interest rates and asset prices...

[biaggio]

Thanks Plan, JRH for clarification

[Cardboard]

Leon Cooperman of Omega on the conference call! Wow!

 

He was asking when they would earn a decent return on equity saying that he was long and quite attracted by the huge discount to book.

 

Cardboard

[racemize]

that was a pretty great call--very open on all the questions!

[mysticdrew]

Was planning to make my next purchase into BAC a warrants... but with todays price action, I might put it into AIG warrants instead.  Ah decisions!

[hardincap]

aig said they're moving from a focus on share buybacks to improving coverage ratio. also said they're now under federal regulation as a sifi. looks like this is what the market is disappointed about.

[Olmsted]

I think some of the disappointment is with P&C - the core of the company.  Combined ratio still high.  Pricing is supposed to be up - but AIG's competitors seem to exhibit better evidence of that.  AIG is just not showing the progress here that they need to - especially now that other value drivers (i.e. buybacks) are essentially finished.  That's done - now core operations need to prove their worth.

[FrankArabia]

they underperformed relative to peers......plain and simple.....operations are not top notch. stock still cheap though.

[Cardboard]

The plain and simple is that the stock market is true garbage.

 

You had Amazon.com last week missing on quarterly earnings, sales and Q4 forecasted sales. I should not say missing earnings because they generated losses. The stock went down briefly after hours then up huge the next day. If it had been Chipotle or any other momo stock it would have been down 20%. Incomprehensible. They had to find some excuse for the move so they talked about some mysterious beat on operating margins. I guess it had to be NA adjusted operating margins!

 

I actually think that Amazon is a fraud. If the stock market did not keep it high, they would have to show profits like Target, Walmart, BestBuy or any other retailer. Retailing is still their main business. Now, that the stock market keeps rewarding them just for showing sales growth, they can keep selling product at cost or below cost. Isn't illegal? With the sales tax advantage disappearing and them building warehouses everywhere to shorten delivery times, there is really no difference anymore in their retailing business with other brick and mortar retailers. There are also other issues, but that is for another discussion or thread. 

 

Here we have AIG, a company that beats both on top and bottom line, increasing book value, solid management, sound capital allocation, selling at half book and the stock is down 6%? Now, the excuse appears to be weak results at Chartis! Whatever!

 

Cardboard

[JRH]

The plain and simple is that the stock market is true garbage.

 

You had Amazon.com last week missing on quarterly earnings, sales and Q4 forecasted sales. I should not say missing earnings because they generated losses. The stock went down briefly after hours then up huge the next day. If it had been Chipotle or any other momo stock it would have been down 20%. Incomprehensible. They had to find some excuse for the move so they talked about some mysterious beat on operating margins. I guess it had to be NA adjusted operating margins!

 

I actually think that Amazon is a fraud. If the stock market did not keep it high, they would have to show profits like Target, Walmart, BestBuy or any other retailer. Retailing is still their main business. Now, that the stock market keeps rewarding them just for showing sales growth, they can keep selling product at cost or below cost. Isn't illegal? With the sales tax advantage disappearing and them building warehouses everywhere to shorten delivery times, there is really no difference anymore in their retailing business with other brick and mortar retailers. There are also other issues, but that is for another discussion or thread. 

 

Here we have AIG, a company that beats both on top and bottom line, increasing book value, solid management, sound capital allocation, selling at half book and the stock is down 6%? Now, the excuse appears to be weak results at Chartis! Whatever!

 

Cardboard

 

It is likely that more buybacks were priced in.  Of course, there is negative feedback here - the more pessimistic the news, the more accretive further buybacks would be.  I believe his comment does not change that they will have opportunities in the longer term.  I think he's just calling the near-term as he sees it.  All you can ask for in capital allocation is the talent to analyze the opportunity set, and pragmatism.  The latter is often undervalued - and sometimes it's not even apparent when it's missing from a manager or management team until it's too late - but I believe he has it.  IMO, that is worth a lot and makes me comfortable having a very large stake.