AIG - American International Group

[Sullivcd]

The new CEO was signaling this is the end but that is left to be seen. With bvps at 74.10 this is only overvalued if another reserve addition or big cat reduces bvps significantly. If the new CEO does what he is promising, this stock will shoot up to a bvps premium. I'm not convinced either way yet, too early to tell.

[zippy1]

[urlhttps://www.wsj.com/articles/aig-strikes-5-56b-deal-to-acquire-a-bermuda-insurer-1516622329?mod=yahoo_hs&yptr=yahoo][/url]

The global insurance conglomerate said Monday it signed a definitive agreement to acquire Validus Holdings Ltd. VR 1.76% in an all-cash deal. AIG said the acquisition would immediately add to its earnings.

Reinsurance is an arrangement in which insurers take on the risk of policies that primary insurers sell to businesses and individuals. A big product line for Validus is property-catastrophe reinsurance for hurricanes and other disasters.

The company also has other operations, including a Lloyd’s syndicate, crop insurance, and a unit that insures small U.S. companies. They overlap minimally with existing businesses at AIG, a leader in insuring multinational corporations and other large businesses and a large U.S. life insurer..

At $68 a share, the deal represents a 46% premium to Validus’s closing share price Friday,  and a 16% premium to its 52-week high.

[Sullivcd]

They are using cash to buy a reinsurer at a 58% premium to book value and 50% premium to share price when they are trading at a discount to book value of close to 20%.  Genius

[Spekulatius]

Sold AIG. Not worth holding. I am overweighted insurers anyways, having recently added significantly to AXS, RE and AHL. At least the former two are not run by complete morons.

[Sullivcd]

https://www.insurancejournal.com/news/national/2018/01/23/478068.htm

"Validus, which had a market value of about $3.71 billion on Friday, provides protection for primary insurance companies that focuses on catastrophe, marine and specialty reinsurance, according to the statement. The company was formed in the wake of Hurricane Katrina with backing from a private equity firm run by Jeff Greenberg, the son of Maurice “Hank” Greenberg who ran AIG for decades before stepping down in 2005."

[zhengmit]

Not sure if everybody still follows the story.  I thought warrant might double from current level.  Has anybody looked at Berkshire disclosure?  What are initial deferred charge assets? How to think about adding $1.8bn reserves from Berkshire side?  I looked at Morgan Stanley's notes on it and thought he is simply wrong.  Any expert opinion?

[fareastwarriors]

Anyone still in AIG?

https://www.reuters.com/article/us-financial-crisis2008-aig/after-its-near-death-aig-ceo-plots-revival-by-returning-to-basics-idUSKCN1LQ15Y

After its near-death, AIG CEO plots revival by returning to basics

[plato1976]

why is this one still dropping everyday even as the rate climbs up?
Changing CEO seems not working immediately --- the warrants will expire in 2 years and are approaching the worthless level

[Spekulatius]

The latest drop is probably due to the recent hurricanes, other re-insurance companies are down too. I own quite a bit of AXS and RE in addition to Fairfax and BRK. I sold AIG after they announced an acquisition at a multiple above book (1.3x ? I don’t remember) while trading below tangible book. At that point, I new my thesis was broken. That was around $60/ share. Below $50, this gets interesting again, but I think I rather stick with adding to my existing holdings in the same sector.

[Sullivcd]

Validus synergies really starting to kick in. These guys are literally the worst