AIG - American International Group

[LC]

RIP

[merkhet]

Here's the transcript with closing arguments from the AIG trial in Wheeler's court.

2015-04-22_AIG_Closing_Arguments_Transcript.pdf

[benchmark]

Here's the transcript with closing arguments from the AIG trial in Wheeler's court.

 

Thanks, interesting read. What's the implication for AIG if Starr wins?

[merkhet]

I suspect that the indemnity clause won't be enforced because there's a release valve if the entity being indemnified was deemed to be grossly negligent and/or engaged in willful misconduct.

[txlaw]

Here's the transcript with closing arguments from the AIG trial in Wheeler's court.

 

Thanks for posting this, merkhet.

[Guest notorious546]

quick question if anyone can help me out. I was looking at the company's lastest results and was wondering which estimate of book value people think is most appropriate and why

As of period end:

Book value per common share (d) $ 80.16 $ 71.77 11.7

Book value per common share excluding accumulated other

comprehensive income (e) $ 72.25 $ 65.49 10.3

Book value per common share excluding accumulated other

comprehensive income and DTA (f) $ 60.69 $ 53.39 13.7

[vinod1]

quick question if anyone can help me out. I was looking at the company's lastest results and was wondering which estimate of book value people think is most appropriate and why

As of period end:

Book value per common share (d) $ 80.16 $ 71.77 11.7

Book value per common share excluding accumulated other

comprehensive income (e) $ 72.25 $ 65.49 10.3

Book value per common share excluding accumulated other

comprehensive income and DTA (f) $ 60.69 $ 53.39 13.7

 

I posted this a couple of times before for this same question but here it goes:

 

Insurers have large bond portfolios which are usually held as "Available for Sale" for accounting purposes. These bonds have to be marked to market as the bond values changes (say, if bonds which have increased in value due to interest rates falling). BW includes these changes. However, liabilities for life insurers, which are also interest rate sensitive are not marked to market. Ex-AOCI basically removes the changes in value of "Available for Sale" from BV. For P&C insurers, we do not need to make this adjustment as liabilities are not very interest rate sensitive.  For life insurers, it makes sense to look at Ex-AOCI.

 

In addition, since DTA's are not operational assets, I would just discount the DTA's for time value and add back to whatever multiple of book value excluding AOCI and DTA that you are using. It does not make sense to use a multiple of DTA when its value is far less that stated value. This makes for better comparision with peers. So 1.1x of 58 + say 70% of DTA value of $11 per share ~ 70 per share.

 

FYI - Management target for 10% ROE is based on excluding both AOCI and DTA.

 

Vinod

[mankap]

Making a slow progress towards 10% ROE.Shares have not moved much in last year although Book Value keeps on growing. AIG is doing the right thing by buying back the shares.

[mbharadwaj]

AIG results out - to Buy Back $3.5 Billion of Stock as Profit Gains 53%

 

https://finance.yahoo.com/news/aig-buy-back-3-5-204654847.html

 

[fareastwarriors]

AIG to Sell $2.4 Billion of AerCap Stock in Public Offering

 

http://www.bloomberg.com/news/articles/2015-06-01/aig-to-sell-2-4-billion-of-aercap-stock-51-of-insurer-s-stake

[mlcglobal]

AIG rap...  ;) https://goo.gl/L9V22E

[fareastwarriors]

AIG rap...  ;) https://goo.gl/L9V22E

 

Well I'm buying more shares when this open up up tomorrow.

[ourkid8]

AIG To Sell Taiwan Consumer And SME Businesses To Nan Shan Life Insurance

AIG Retains Taiwan Commercial Insurance Operations

 

http://finance.yahoo.com/news/aig-sell-taiwan-consumer-sme-102000507.html

 

Additional cash which will be put towards their massive share repurchase program! 

 

Tks,

S

[treasurehunt]

Hank Greenberg wins lawsuit, but is awarded no damages.

 

http://www.bloomberg.com/news/articles/2015-06-15/hank-greenberg-s-starr-wins-trial-but-no-damages-in-aig-suit

 

Explains why AIG is up on this generally down day, I suppose.

[Alekbaylee]

Q2 earnings out

 

http://www.aig.com/press-releases_3171_438003.html

 

Divvy up 124%!

[mankap]

The dividend is now higher than the threshold at which which strike price of AIG warrants will start going down.

[benchmark]

The dividend is now higher than the threshold at which which strike price of AIG warrants will start going down.

 

Big drop after earning, was the conference call really bad?

[rpadebet]

The dividend is now higher than the threshold at which which strike price of AIG warrants will start going down.

 

Big drop after earning, was the conference call really bad?

 

Profit taking I suppose. It has happened quite often with this company after earnings if I remember correct. The sentiment here is a bit opposite to something like AMZN.

 

I find the growth in book value good and I like they have increased dividend as well as bought back a bunch of shares. Hope they buy more at these levels. I was long the warrants but over the past year I am long the Jan16 calls and am thinking of rolling it out further. I think the discount to BV will narrow as ROE edges towards 10%.

[orthopa]

Management has done an excellent job of buying back shares, delevering the balance sheet and now as a warrant holder very happy withe warrant increase. Need 67.5 of divs paid in a cumulative 12 month period and adjustments start. This should start including and after the December dividend, 12.5+28+28=68.5 cents. With ~5 years to go till expiration at that point I will take ~20 adjustments. Should make a nice dent in the strike price and warrants per share. ROE and CR still not stellar but company should buy back almost 11B in shares this year below book value. Market cap is only 83B.

 

From what I recall the AIG warrants are adjusted to the .001 so there is no .1 bar like the BAC warrants. So warrants/share should be adjusted immediately.

 

Is anyone able to decipher from the prospectus regarding the dividend, is it difference of the total dividend- the 67.5 hurdle yearly or once the hurdle is met then all divs are allocated going forward?

 

If its the total-the hurdle that should get warrants holders ~.45 a year in adjustments.

 

[Kiltacular]

Management has done an excellent job of buying back shares, delevering the balance sheet and now as a warrant holder very happy withe warrant increase. Need 67.5 of divs paid in a cumulative 12 month period and adjustments start. This should start including and after the December dividend, 12.5+28+28=68.5 cents. With ~5 years to go till expiration at that point I will take ~20 adjustments. Should make a nice dent in the strike price and warrants per share. ROE and CR still not stellar but company should buy back almost 11B in shares this year below book value. Market cap is only 83B.

 

From what I recall the AIG warrants are adjusted to the .001 so there is no .1 bar like the BAC warrants. So warrants/share should be adjusted immediately.

 

Is anyone able to decipher from the prospectus regarding the dividend, is it difference of the total dividend- the 67.5 hurdle yearly or once the hurdle is met then all divs are allocated going forward?

 

If its the total-the hurdle that should get warrants holders ~.45 a year in adjustments.

 

 

http://www.sec.gov/Archives/edgar/data/5272/000095012311003847/y89089e424b2.htm

 

If AIG makes a cash distribution to all holders of Common Stock, excluding (a) any cash dividend on Common Stock to the extent that the aggregate cash dividend per share of Common Stock does not exceed $0.675 per share of Common Stock in the aggregate in any twelve-month period (the “Dividend Threshold Amount”) , (b) any cash that is distributed as part of a distribution referred to in paragraph (3) above, and © any consideration payable in connection with a tender offer referred to in paragraph (5) below, then the exercise price will be adjusted based on the following formula: 

 

 

 

SR1 = SR0 x (SP0 − C) / SP0

 

 

 

where,

 

 

 

 

             

 

SR0

    =    the exercise price in effect at the close of business on the record date 

 

SR1

    =    the exercise price in effect immediately after the record date 

 

SP0

    =    the Current Market Price as of the record date 

 

C

    =    the excess of the amount in cash per share of Common Stock that AIG distributes to holders over the Dividend Threshold Amount 

 

 

 

 

 

The Dividend Threshold Amount is subject to adjustment on a proportional basis whenever the exercise price is adjusted, provided that no adjustment will be made to the Dividend Threshold Amount for any adjustment made to the exercise price pursuant to this paragraph (4).

...and...

 

Upon any adjustment in the exercise price, each Warrant will evidence the right to purchase the number of shares of Common Stock obtained by multiplying the number of shares of Common Stock purchasable immediately prior to the adjustment by the exercise price in effect immediately prior to the adjustment and dividing that product by the exercise price in effect after the adjustment. All anti-dilution adjustment calculations will be made to the nearest hundredth of a cent or 1/1,000th of a share, as applicable. No adjustment will be required if the calculation results in a change to the exercise price of less than ten cents; however, any such amount will be carried forward and applied in any subsequent adjustment of the exercise price.

[Uccmal]

I added to my small AIG position right after the earnings price drop - common and warrants. This company is executing quite well.  I had cut alot of my earlier position to raise cash. 

[doughishere]

Is the govt really appealing the decision made in Starr?

[morningstar]

Is the govt really appealing the decision made in Starr?

 

They're lawyers with a flexible budget who had a ruling go against them. Chance of an appeal was 100% I think.

[Liberty]

Icahn: http://carlicahn.com/aig-ceo-letter/

[BargainValueHunter]

Icahn: http://carlicahn.com/aig-ceo-letter/

Up nearly 5% in the pre-market.

 

The intro to the Letter:

 

It is my experience that in Corporate America, even when all available data points to the same undeniable conclusion and when all stakeholders desire the same mutually beneficial outcome, an external force is often still required to effect meaningful and positive change. This is the current situation in which AIG shareholders find themselves.

 

The company continues to severely underperform its peers and is now facing an increasingly onerous regulatory burden which will only further erode its competitive position. Despite definitive action on the part of Congress and regulators to encourage this company to become smaller and simpler by splitting up, you have shown no sign of urgency and have chosen a “wait and see…for years” strategy void of decisive leadership. As a result AIG consistently trades at a substantial discount to book value.  It is a “no-brainer” that the simple act of splitting this company up will greatly enhance shareholder value.  AIG should immediately:

 

Pursue tax free separations of both its life and mortgage insurance subsidiaries to create three independent public companies. Each would be small enough to mitigate and avert the Systemically Important Financial Institution (“SIFI”) designation.

 

Embark on a much needed cost control program to close the gap with peers.

 

We believe there is no more need for procrastination, the time to act is now. I have already heard from several large shareholders who are frustrated with the lack of clear progress and are supportive of an AIG break up. I cannot fathom how you could ignore repeated requests from shareholders to execute a plan that would release billions of dollars of capital, free the company from onerous excess regulation, and leave shareholders owning stock in three separate, market leading insurance franchises.

 

“AIG is frankly overdue in following in the footsteps of all other major multi-lines in breaking up Life and P&C into separate companies.  By separating into three independent companies, reducing unnecessary corporate overhead, operating at average industry returns, and buying back stock, AIG can trade at over $100 per share – 66% above its current $60 price,” John Paulson, President, Paulson & Co. Inc.