racemize Posted December 20, 2012 Share Posted December 20, 2012 posting twacowfca's comments re AIG from LRE thread, just for documentation purposes. Hi twacowfca I appreciate such a considered reply. Do you have any idea who LRE would turn to for industry loss warranties? Is there more or less counterparty risk than just reinsuring? One last one are ILW's more likely to suffer mispricing? Thanks in advance nwoodman AIG is reportedly the big elephant that has been writing a lot of ILW's, mostly at the $20B level. AIG projects their Sandy loss at $2B, far more than other insurers. I don't know if that estimate includes any ILW's they wrote. AIG has a history of picking up pennies in front of steamrollers as when they wrote a lot of cheap CDS a few years ago that destroyed 90% of shareholder value. Writing these recent cheap ILW's is small potatoes compared to writing the Notorious CDS. The ILWs that AIG wrote were reportedly very cheap with a rate on line of about 5% of the coverage amount at the $20 B industry loss level. Whether these were miss priced or not remains to be determined. The great majority that they reportedly wrote at the $20B level may or may not be triggered. Depending on loss development, AIG could fall on their face or dodge a bullet. Time will tell. :) Since I'm invested in AIG, (not to side track this thread), but do you have any idea how the losses would grow for them if it is greater than the $20B level? (Feel free to respond in AIG thread, if you like) I don't think their losses will grow dramatically or disproportionately as the industry loss might creep above the $20B loss level, except for perhaps a bump up at the $20B industry loss level if they haven't included the ILWs they wrote in their estimate. In my opinion, it is more likely than not that these won't be triggered because of the way their basis is calculated. Their basis for calculation is lower than the basis used for some of the other industry loss estimates. It's possible that AIG 's estimate will turn out to be a little on the high side, but nobody knows with any firm assurance exactly how these losses will develop because the impact of Sandy was so widespread and diverse. Link to comment Share on other sites More sharing options...
mrvlad0 Posted December 20, 2012 Share Posted December 20, 2012 (CNBC) Bob Benmosche $AIG (video) http://video.cnbc.com/gallery/?play=1&video=3000135722 Link to comment Share on other sites More sharing options...
fareastwarriors Posted December 21, 2012 Share Posted December 21, 2012 Priorities according to CEO 1) retire debt 2) build capital/liquidity "longer term" 3) dividend 4) stock buyback Link to comment Share on other sites More sharing options...
JRH Posted December 21, 2012 Share Posted December 21, 2012 (CNBC) Bob Benmosche $AIG (video) http://video.cnbc.com/gallery/?play=1&video=3000135722 Pretty simple. Collect the AIA and ILFC money, pay down debt/satisfy regulators, then evaluate buybacks/dividends. Assuming AIG continues to trade at a significant discount to book, I believe (hope?) they will lean towards buybacks. I think his previous suggestion that "buybacks are done for now" is in the context of getting debt paid down and regulators satisfied before any capital return occurs. For anyone holding warrants (I do), it is a significant question. We could have seven years of dividends before the warrants expire, and every year, the warrants "leak" up to $0.67 in value through dividends. That's a potential difference of $4.50+ in value per warrant between a buyback focus and a dividend focus (discount the $4.50 back to present value however you like) - even ignoring the leverage that buybacks perform between IV and the strike price. Anyway, that discounted dividend "leakage" would, in any case, be a big chunk of the $14/warrant price today. Link to comment Share on other sites More sharing options...
racemize Posted December 21, 2012 Share Posted December 21, 2012 (CNBC) Bob Benmosche $AIG (video) http://video.cnbc.com/gallery/?play=1&video=3000135722 Pretty simple. Collect the AIA and ILFC money, pay down debt/satisfy regulators, then evaluate buybacks/dividends. Assuming AIG continues to trade at a significant discount to book, I believe (hope?) they will lean towards buybacks. I think his previous suggestion that "buybacks are done for now" is in the context of getting debt paid down and regulators satisfied before any capital return occurs. For anyone holding warrants (I do), it is a significant question. We could have seven years of dividends before the warrants expire, and every year, the warrants "leak" up to $0.67 in value through dividends. That's a potential difference of $4.50+ in value per warrant between a buyback focus and a dividend focus (discount the $4.50 back to present value however you like) - even ignoring the leverage that buybacks perform between IV and the strike price. Anyway, that discounted dividend "leakage" would, in any case, be a big chunk of the $14/warrant price today. agreed, this is why I like the BAC-A better, but I've got AIG warrants as well. Link to comment Share on other sites More sharing options...
mankap Posted December 21, 2012 Share Posted December 21, 2012 I am thinking that AIG may not even ask for dividend and buyback from Fed in Jan 2013 as part of the CCAR process. Bob mentioned that they are on track to meet their aspirational goal by 2015. ( 10% ROE). He said that he expects 2013 to be a good year for AIG.I hope that they can show underwriting profit for P&C in 2013. Link to comment Share on other sites More sharing options...
alertmeipp Posted December 21, 2012 Share Posted December 21, 2012 Priorities according to CEO 1) retire debt 2) build capital/liquidity "longer term" 3) dividend 4) stock buyback This priority list looks familiar. ;D On a side note, futures down 200 pts due to da cliff nonsense Link to comment Share on other sites More sharing options...
berkshiremystery Posted December 25, 2012 Share Posted December 25, 2012 Here's a new article from SeekingAlpaha from today that seems already a little outdated :o The author writes that the government still owns 15% common shares, but they only own currently some remaining warrants. Anyway,... I just post the link to the article. AIG Needs To Be Strongly Revalued 2012-12-25 SeekingAlpha.com http://seekingalpha.com/article/1081401-aig-needs-to-be-strongly-revalued?source=yahoo Link to comment Share on other sites More sharing options...
berkshiremystery Posted December 27, 2012 Share Posted December 27, 2012 Some new article with great tables.... Bob mentioned that they are on track to meet their aspirational goal by 2015. ( 10% ROE). He said that he expects 2013 to be a good year for AIG.I hope that they can show underwriting profit for P&C in 2013. ... and IF Bob might reach his 10% ROE already by 2015,... the future EPS table below might be behind the curve. Time will tell who is right. ----- AIG Is The Best Insurance Play For 2013 2012-12-26 SeekingAlpha.com http://seekingalpha.com/article/1082001-aig-is-the-best-insurance-play-for-2013?source=yahoo http://static.cdn-seekingalpha.com/uploads/2012/12/1062195_13565008328807_1.png ..... http://static.cdn-seekingalpha.com/uploads/2012/12/26/1062195-13565013807393024-Alex-Cho_origin.png ..... http://static.cdn-seekingalpha.com/uploads/2012/12/1062195_13565008328807_2.png ..... http://static.cdn-seekingalpha.com/uploads/2012/12/1062195_13565008328807_3.png Link to comment Share on other sites More sharing options...
berkshiremystery Posted December 27, 2012 Share Posted December 27, 2012 Could A.I.G. Happen Again? 2012-12-23 NY Times - Opinion Pages http://www.nytimes.com/2012/12/24/opinion/could-aig-happen-again.html While those agencies have made some progress, like requiring derivative trades to be more transparently traded and reported, they have completed just one-third of the rules required by the law. The things regulators have yet to finish include imposing limits on the size of bets investors can make using credit default swaps and other exotic financial instruments, and also requiring investors to maintain sufficient reserves to make good on all of those bets. Link to comment Share on other sites More sharing options...
CONeal Posted January 4, 2013 Share Posted January 4, 2013 Last I remember Sandy estimates for AIG was 1.3 billion. saw their new commercial and It references payouts are expected to be around 2 billion. Link to comment Share on other sites More sharing options...
Olmsted Posted January 4, 2013 Share Posted January 4, 2013 Last I remember Sandy estimates for AIG was 1.3 billion. saw their new commercial and It references payouts are expected to be around 2 billion. Estimates did not go up. $2b in cat losses creates a tax benefit on the order of $.7b. The $1.3b is the after-tax Sandy loss. Link to comment Share on other sites More sharing options...
berkshiremystery Posted January 5, 2013 Share Posted January 5, 2013 AIG says Thanks for the Cash (Video) http://www.indecisionforever.com/blog/2013/01/03/aig-says-thanks-for-the-cash-video ----- American International Group (AIG): Story Now Becomes Simpler For Investors 2013-01-04 http://www.istockanalyst.com/finance/story/6219833/american-international-group-aig-story-now-becomes-simpler-for-investors Link to comment Share on other sites More sharing options...
berkshiremystery Posted January 6, 2013 Share Posted January 6, 2013 Longer term, we believe the company's operational turnaround will help AIG realize its intrinsic value, as Chartis, AIG's property and casualty arm, improves its return on equity to the targeted 10 - 12% by 2015. To achieve this ROE target, Chartis's management, led by the talented Peter Hancock, is emphasizing international and shorter tail consumer property lines, while investing in new policy administration and back office systems. We believe this ROE target is achievable, and view the early evidence as promising: a ~300 bps year-over-year improvement in Chartis' Q2'12 ex-cat loss ratio to 65.2% and a ~100 bps year-over-year increase in consumer share of premiums to 39% in Q2. We are further encouraged that Chartis' turnaround has the wind at its back with the mid to high single digit pricing growth in the property and casualty insurance industry. Source: Daniel Loeb Up 21 Percent on Wins in Greek Bonds, Yahoo, AIG http://www.nasdaq.com/article/daniel-loeb-up-21-percent-on-wins-in-greek-bonds-yahoo-aig-cm204367#.UOjCc3y9KK2 Link to comment Share on other sites More sharing options...
mrvlad0 Posted January 7, 2013 Share Posted January 7, 2013 The Bailout of A.I.G. http://www.nytimes.com/2013/01/07/opinion/the-bailout-of-aig.html?_r=0 Link to comment Share on other sites More sharing options...
Guest Dazel Posted January 7, 2013 Share Posted January 7, 2013 Has anyone seen what AIG will be looking at for returning capital to shareholders this year? I know that Citigroup has leaked their plan to buyback shares. Dazel. Link to comment Share on other sites More sharing options...
MYDemaray Posted January 8, 2013 Share Posted January 8, 2013 The circus is in town: http://dealbook.nytimes.com/2013/01/07/rescued-by-a-bailout-a-i-g-may-sue-its-savior/?ref=business My guess: they're politely hearing Hank out and will decline to join the suit. Link to comment Share on other sites More sharing options...
berkshiremystery Posted January 8, 2013 Share Posted January 8, 2013 Lawrence Cunningham, the author of The Essays of Warren Buffett, now co-wrote a new book together with Maurice ("Hank") Greenberg, called "The AIG Story" AIG Damaged by Government Run Amok, Ex-CEO Greenberg Says 2013-01-07 Bloomberg.com http://www.bloomberg.com/news/2013-01-07/aig-damaged-by-government-run-amok-ex-ceo-greenberg-says.html "The AIG Story" By Maurice ("Hank") Greenberg & Lawrence Cunningham ISBN: 978-1118345870 Publisher: Wiley; 1 edition (January 29, 2013) http://www.amazon.com/The-AIG-Story-Maurice-Greenberg/dp/1118345878/ ------ AIG Stock Vs. Warrant Returns Relative To Book Value 2013-01-07 SeekingAlpha.com http://seekingalpha.com/article/1097911-aig-stock-vs-warrant-returns-relative-to-book-value Link to comment Share on other sites More sharing options...
txlaw Posted January 8, 2013 Share Posted January 8, 2013 Lawrence Cunningham, the author of The Essays of Warren Buffett, now co-wrote a new book together with Maurice ("Hank") Greenberg, called "The AIG Story" AIG Damaged by Government Run Amok, Ex-CEO Greenberg Says 2013-01-07 Bloomberg.com http://www.bloomberg.com/news/2013-01-07/aig-damaged-by-government-run-amok-ex-ceo-greenberg-says.html "The AIG Story" By Maurice ("Hank") Greenberg & Lawrence Cunningham ISBN: 978-1118345870 Publisher: Wiley; 1 edition (January 29, 2013) http://www.amazon.com/The-AIG-Story-Maurice-Greenberg/dp/1118345878/ ------ AIG Stock Vs. Warrant Returns Relative To Book Value 2013-01-07 SeekingAlpha.com http://seekingalpha.com/article/1097911-aig-stock-vs-warrant-returns-relative-to-book-value Well, this goes to the top of the queue of books to buy on my Kindle. Link to comment Share on other sites More sharing options...
MrB Posted January 8, 2013 Share Posted January 8, 2013 2011 Yale Guest Speaker Maurice "Hank" Greenberg Link to comment Share on other sites More sharing options...
rohitc99 Posted January 8, 2013 Share Posted January 8, 2013 http://dealbook.nytimes.com/2013/01/07/rescued-by-a-bailout-a-i-g-may-sue-its-savior/ aig may sue US govt Link to comment Share on other sites More sharing options...
MYDemaray Posted January 8, 2013 Share Posted January 8, 2013 http://dealbook.nytimes.com/2013/01/07/rescued-by-a-bailout-a-i-g-may-sue-its-savior/ aig may sue US govt After all the headlines this morning, I can't help but think the board will politely hear Mr. Greenberg out, then decline to join the suit. I'm sure they don't want months of "Thank you America, we're suing you" headlines... Link to comment Share on other sites More sharing options...
DCG Posted January 8, 2013 Share Posted January 8, 2013 http://dealbook.nytimes.com/2013/01/07/rescued-by-a-bailout-a-i-g-may-sue-its-savior/ aig may sue US govt At first glance, this is a pretty pathetic move. Link to comment Share on other sites More sharing options...
MYDemaray Posted January 8, 2013 Share Posted January 8, 2013 Appears that the press backlash is at the simple fact that the board has been willing to officially hear Hank Greenberg's presentation...nothing more Link to comment Share on other sites More sharing options...
berkshiremystery Posted January 8, 2013 Share Posted January 8, 2013 A LETTER FROM A.I.G. 2013-01-08 by Andy Borowitz NEW YORK (The Borowitz Report) – Today, American International Group (A.I.G.) issued the following letter to American taxpayers. Dear American Taxpayers: In 2008, you paid for a bailout of A.I.G. totalling $182 billion. Today, we are writing to tell you that we’re thinking of suing you. By suing you, we are standing up for the right of every other American who might, through no fault of his own, have his life saved and want to sue the person who saved him for millions of dollars. And that’s why we’re asking for your help today. Read more: http://www.newyorker.com/online/blogs/borowitzreport/2013/01/a-letter-from-aig.html#ixzz2HQJpZfbH Link to comment Share on other sites More sharing options...
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