AIG - American International Group

[PlanMaestro]

Book value in billions of main operations (page-8)

http://www.aigcorporate.com/investors/2012_February/Q42011_FinancialSupplement.pdf

2011 2010

49.4  45.5  Chartis

35.5  34.9  SunAmerica

  7.6    8.2  ILFC

  2.4    2.2  United Guaranty

94.9  90.8  Total

 

SunAmerica includes 1.3 billion from Maiden Lane II that will begin receiving payments this year.

 

Chartis and SunAmerica also distributed 3 billion in dividends to the Parent.  Dividends to the Parent projected for 2012: About 2.5 billion to 4.5 billion might come from Chartis and somewhere around 2 billion from SunAmerica

 

[MrB]

http://finance.yahoo.com/q?s=AIG&ql=0

 

Volume: 18,346,158

Avg Vol (3m): 5,197,280

 

Total shares outstanding 1,897m

 

 

[PlanMaestro]

The annual statement has 407 pages and they hide this in page 395. $5.8 per share tax allowance..

 

Make losses and prosper, AIG edition

http://ftalphaville.ft.com/blog/2012/02/24/896181/make-losses-and-prosper-aig-edition/

 

Ok, we might have told her that the valuation allowance still has $11bn in it as of the end of 2011, according to the 10-K (page 395). So, AIG could do more of this in the next quarter.

 

[...]

 

Doesn’t the United States Department of the Treasury already own more than 50 percent of AIG common stock?

 

Yes. Under guidance issued by the IRS, AIG is not treated as having experienced an ownership change as a result of such ownership.

 

 

 

[PlanMaestro]

 

UPDATE 1-NY Fed holding auction for last Maiden Lane II bonds -sources

http://www.reuters.com/article/2012/02/28/usa-fed-mbs-maidenlane-idUSL2E8DS77C20120228

 

Looks like we are getting back our principal, interests, and a little more.

 

Units of Morgan Stanley, Credit Suisse Group AG , Royal Bank of Scotland Group Plc, Barclays Plc and Bank of America Corp took part in the auction for the assets worth about $7 billion notional, one of the sources said.

 

The auction is the third this year, underscoring Wall Street's heavy demand for the bonds. The winning bidder is expected to quickly sell the securities to clients such as hedge funds.

 

Goldman Sachs Group Inc, which bought $6.2 billion worth of the so-called residential mortgage-backed securities earlier this month, was not involved in the New York Fed's latest auction, said one source. Credit Suisse bought a $7-billion chunk of the portfolio after the first auction in January.

 

[PlanMaestro]

If the NY Fed has a profit, AIG has a profit ... probably in the low hundreds of millions. Plus principal and interests. Maiden Lane II was the vehicle that had the subprime mortgage backed securities. Maiden Lane III should be much better and AIG shares a higher percentage of the profits.

 

The New York Fed says its management of the AIG mortgage bond portfolio — known as Maiden Lane II — “will result in full repayment of the $19.5 billion loan extended by the New York Fed to ML II and generate a net gain for the benefit of the public of approximately $2.8 billion, including $580 million in accrued interest on the loan.”

[BargainValueHunter]

If the NY Fed has a profit, AIG has a profit ... probably in the low hundreds of thousands. Plus principal and interests. Maiden Lane II was the vehicle that had the subprime mortgage backed securities. Maiden Lane III should be much better and AIG shares a higher percentage of the profits.

 

The New York Fed says its management of the AIG mortgage bond portfolio — known as Maiden Lane II — “will result in full repayment of the $19.5 billion loan extended by the New York Fed to ML II and generate a net gain for the benefit of the public of approximately $2.8 billion, including $580 million in accrued interest on the loan.”

 

Good news.

 

Maybe AIG will be the next BAC! (The stock everyone loved to hate until, suddenly and without warning, it becomes the CNBC darling in a bizarre sentiment metamorphosis.)

[alertmeipp]

I thought BAC is cheaper than AIG?!

[treasurehunt]

Did you mean low hundreds of millions? AIG gets one sixth of the profits, I believe. Taking out the accrued interest of 580 million from the 2.8 billion net gain and dividing by 6, I get 370 million. Not bad.

 

If the NY Fed has a profit, AIG has a profit ... probably in the low hundreds of thousands. Plus principal and interests. Maiden Lane II was the vehicle that had the subprime mortgage backed securities. Maiden Lane III should be much better and AIG shares a higher percentage of the profits.

 

The New York Fed says its management of the AIG mortgage bond portfolio — known as Maiden Lane II — “will result in full repayment of the $19.5 billion loan extended by the New York Fed to ML II and generate a net gain for the benefit of the public of approximately $2.8 billion, including $580 million in accrued interest on the loan.”

[PlanMaestro]

Did you mean low hundreds of millions? AIG gets one sixth of the profits, I believe. Taking out the accrued interest of 580 million from the 2.8 billion net gain and dividing by 6, I get 370 million. Not bad.

 

Ups, that's what I meant. Corrected. Thanks.

[PlanMaestro]

At AIG, the crisis is over.

 

Benmosche letter to shareholders

http://www.aigcorporate.com/investors/2012_February/AIG_2011_Annual_Report_LetterShareholders.pdf

[PlanMaestro]

Steve Miller, AIG Chairman letter to shareholders and victory dance

http://www.aigcorporate.com/investors/2012_February/AIG_2011_Annual_Report_-_Chairman's_Message.pdf

 

In my career, I have been honored to be part of and witness dramatic turnarounds. The story of AIG’s transformation and the progress this company has made, from my vantage point, are remarkable. Bob deserves tremendous praise and respect for everything accomplished at AIG since he joined in August 2009. To quote the old idiom, “Time will tell,” but I predict that Bob and the people of AIG may have orchestrated the largest turnaround in corporate history.

 

Less than three short years ago, AIG leadership was steering this great company to its breakup. Under the theory that selling off the company’s assets was the best way to generate the funds to repay American taxpayers, legal mechanisms were put in place, businesses were rebranded, and assets were being sold. Unfortunately, these efforts would have fallen far short of repaying our obligations to the taxpayers.

 

Then Bob came along with an outsider’s fresh perspective of what it meant to compete against AIG. As former Chief Executive of another large insurance company, Bob recognized that AIG was made up of proud professionals who were the best, the most innovative, and consistently the fiercest competitors in nearly every core business in which AIG operated.

 

Bob asked the Board, “Isn’t AIG worth more together than the sum of its parts?” “Aren’t AIG’s people worth more?” These questions begged a change in course – and made us reconsider our plans. Bob knew the answers and set about planning and executing what ultimately raised nearly $45 billion, nearly every cent directly payable to the U.S. government. Eventually, with the U.S. Department of the Treasury and the Federal Reserve convinced that the breakup of AIG wasn’t necessary, the complete recapitalization of the U.S. government investment was put in motion.

 

The unprecedented accomplishments, persistence, and commitment of Bob and the people of AIG raises the bar on what we as Board members think is expected of us. As a Board, we feel the need to do our part to ensure that these accomplishments are not wasted. We certainly have fiduciary and governance responsibilities mandated by corporate charter and regulators, but this Board feels a greater sense of purpose and responsibility.

[prunes]

Plan were you fortunate enough to buy shares before the big run up? Hopefully this drops below $25 again.

[bargainman]

Plan were you fortunate enough to buy shares before the big run up? Hopefully this drops below $25 again.

 

Jan 2011 AIG was trading in the low 60s.  Just sayin...

[ERICOPOLY]

Plan were you fortunate enough to buy shares before the big run up? Hopefully this drops below $25 again.

 

Jan 2011 AIG was trading in the low 60s.  Just sayin...

 

Before the heavily dilutive warrants were issued.

[PlanMaestro]

 

 

AIG Exited $500 Million Stake in Blackstone

http://blogs.wsj.com/deals/2012/03/02/aig-to-exit-500-million-stake-in-blackstone/

 

American International Group exited a $500 million stake in private-equity firm Blackstone Group LP (BX) through a block trade prior to Friday’s market open, CNBC reported this morning.

 

The stake goes back to July 1998. Here are the details of that investment from WSJ’s story at the time:

 

American International Group agreed to buy a 7% stake in the Blackstone Group, and to give the leveraged-buyout firm $1.2 billion of investment capital, one of the largest-ever single investments in the booming buyout sector.

 

AIG, a New York-based insurance and financial services giant, agreed to pay Blackstone $150 million for the 7% ownership stake…The AIG deal values New York-based Blackstone, which will be 93%-owned by its practicing partners, at a minimum of $2.2 billion.

 

[PlanMaestro]

How AIG's Fate Became a Wall Street Battleground ... and why AIG hates Blackstone

http://www.minyanville.com/businessmarkets/articles/thestreet-wall-st-financial-crisis-ed/1/3/2011/id/31965#ixzz1o1bUIl3q

 

But even as Blackstone became shut out of its role as a lead adviser for AIG's restructuring process, it continued racking up fees because of a contract inked under a previous AIG management team. In the end, AIG paid four firms this year -- Blackstone, Goldman, Rothschild and Citigroup © -- to do the work that Blackstone alone had been contracted to perform, starting in late-2008.

 

"They hadn't been doing anything, even though they had been billing us monthly," says a high-level source intimately involved in AIG's negotiations who wasn't authorized to speak on the record. "We just wanted to get them out of our offices; we wanted to get them out of here; we just couldn't stand them being here anymore. But they were still charging us."

 

A source siding with Blackstone disputes that characterization, describing the firm's services as "a bargain" and noting that some AIG executives who have "been hurt in the pocketbook" due to the company's stock decline or bonus restrictions have ample reason to gripe about Blackstone's fees.

 

Robert Goldberg, a former investment banker who now teaches finance at Adelphi University, points out that for more than two years, taxpayers have been indirectly footing the bill.

 

"If AIG had gone into bankruptcy, the contracts would have been tossed in with all those other liabilities," says Goldberg. "They avoided that with a government bailout."

 

In any case, the relationship has come to a close -- and Blackstone is only the latest in a string of high-level corporate casualties that AIG has endured since its initial bailout woes. What follows is the story of AIG's forced restructuring, through three different management teams, based on interviews with several parties directly involved in negotiations.

[PlanMaestro]

First Blackstone then AIA. Kaboom.

 

http://www.businesswire.com/news/home/20120304005046/en/AIG-Announces-Proposed-Sale-Ordinary-Shares-AIA

 

AIG expects to use the net proceeds from the placing of AIA ordinary shares to reduce the balance due to the U.S. Department of the Treasury (Treasury) on Treasury’s preferred equity interest in the special purpose vehicle through which AIG holds the AIA ordinary shares.

[racemize]

I read the chapter vinod mentioned and went ahead and did a full triangle analysis for the current 10-k in a google doc.  Here's a link to the published version:

 

https://docs.google.com/spreadsheet/pub?key=0AhTPR9eP5nWedGhDRUdsMU52anZONi1VdGljSHN0ZlE&gid=0

 

Looks like reserving was pretty bad in the very long tail (> 10 years, and 2001 and 2002).  More recent reserving was good up until 2008, which I assume is due to low pricing power for AIG/weak market. 

 

The tail analysis came out at roughly 2.73 years.

[Olmsted]

So has anyone looked seriously at AIA?  Berkowitz obviously likes it, and Greenberg apparently considered it to be one of AIG's jewels.  Could get very cheap if AIG continues to sell off its stake... (though I see they cannot sell any more before September)

[PlanMaestro]

So has anyone looked seriously at AIA?  Berkowitz obviously likes it, and Greenberg apparently considered it to be one of AIG's jewels.  Could get very cheap if AIG continues to sell off its stake... (though I see they cannot sell any more before September)

 

Seriously, no. It fell more than 8% today after AIG's sale. It might be worth some analysis but  more of a growth story when priced at 2x BV and 21x operating profit after tax.

 

http://media.corporate-ir.net/media_files/IROL/23/238804/FY2011_Analyst_Presentation_FINAL.pdf

 

 

[PlanMaestro]

AIG buys back $3 billion common shares from the Treasury.

 

http://www.bloomberg.com/news/2012-03-07/aig-to-buy-up-to-3-billion-of-its-shares-on-offer-in-6-billion-u-s-sale.html

[Olmsted]

Yeah, my post seems kind of stupid now that I read it again.

 

Anyway - Treasury selling some more AIG shares:

 

http://www.reuters.com/article/2012/03/07/usa-aig-treasury-idUSL2E8E7G0320120307?feedType=RSS&feedName=financialsSector&rpc=43

 

This time AIG is buying half, as opposed to selling alongside the treasury, which is nice to see.  I imagine the treasury will not sell below break-even, but if traders play with the price it may be a second chance to get in cheap. (Not that $30 isn't cheap...) 

 

[Cardboard]

Some of the press on this makes me sick. The Street.com is one thing, but for Fortune to publish such garbage it is sad. How can this recent series of events be seen as negative?

 

http://www.thestreet.com/_yahoo/story/11447752/1/aig-share-sale-a-drop-in-the-bailout-bucket.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

 

http://finance.fortune.cnn.com/2012/03/07/treasury-aig-42-billion/?source=yahoo_quote

 

Is Buffett asleep at the wheel here or what? You have his beloved Ajit Jain having high regard for Hancock who is in charge of Chartis the largest operation, you have an elephant in the insurance world waiting to be bought at a 47% discount to its tangible book value and you could please Mr. Obama by pretty much exiting the U.S. bailout program completely by buying a large chunk of AIG which the Treasury would then have no problem selling the rest to followers at higher prices!

 

Cardboard

[PlanMaestro]

http://www.reuters.com/article/2012/03/08/us-usa-treasury-aig-idUSBRE82702320120308?feedType=RSS&feedName=businessNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=56943

 

U.S. government still owns 77 percent of AIG. Once the company repays Treasury for AIA, the value of the government's stake would total about $41.8 billion, Treasury said in a statement.

 

AIG said it intends to repurchase up to $3 billion of its own stock once the Treasury's offering is priced. The U.S. government hired Citigroup Inc, Credit Suisse and Morgan Stanley to coordinate the offering.

 

AIG last traded at $29.45 a share on Wednesday, slightly above the break-even price of $29 per share.

 

Treasury also said AIG is expected to repay the $8.5 billion (RR: AIA SPV with NY Fed) from the following sources:

 

* $5.6 billion in expected proceeds from AIG's recently announced sale of ordinary sales of AIA;

* $1.6 billion in expected proceeds from the Federal Reserve Bank of New York's final disposition of Maiden Lane II LLC securities announced on February 28, and

* $1.6 billion in escrowed cash proceeds from AIG's sale of its American Life Insurance Co subsidiary to MetLife Inc.

 

[PlanMaestro]

Is Buffett asleep at the wheel here or what? You have his beloved Ajit Jain having high regard for Hancock who is in charge of Chartis the largest operation, you have an elephant in the insurance world waiting to be bought at a 47% discount to its tangible book value and you could please Mr. Obama by pretty much exiting the U.S. bailout program completely by buying a large chunk of AIG which the Treasury would then have no problem selling the rest to followers at higher prices!

 

Cardboard

 

Please don't wake him up Cardboard so we can continue buying back from the US Treasury at these prices.