Author Topic: AIG - American International Group  (Read 660601 times)

Gregmal

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Re: AIG - American International Group
« Reply #1980 on: October 18, 2018, 06:58:08 PM »
This is a dumpster fire. While I once loved this and did very well with the investment, deciding to sell the day Bob left was a great move. This is just a horribly run company, with a brand that isn't what it once was, and destroying so much value in the process. That and it seems anyone worth a dime at AIG is either poached by Berkshire or leaves for anyway.


Cigarbutt

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Re: AIG - American International Group
« Reply #1981 on: October 19, 2018, 05:38:50 AM »
When a stock goes down and it's mostly a temporary and fixable issue, it may make a lot of sense to buy.
Not here though IMO.

Property casualty insurers are like banks, in a way, in the sense that they typically have a block box component that is very hard to figure out even if one dissects the reserve triangles and in the sense that there is a trust component related to the fact that the reality of the balance sheet numbers will only be discovered over a relatively long period. Based on its historical record, reported numbers and industry dynamics, I expect AIG to do poorly on an absolute and relative basis.

Reviewing the numbers at AIG is a sore reminder that the (re)insurance industry as a whole is struggling to achieve strong returns. Why is that?

AIG was bailed out based on a liquidity event and further developments showed that the solvency issue, although very significant, was only relative. This relative solvency issue however IMO is at the root of AIG's travails and the industry's idleness.

When one looks at the overall "return" on the bailout "investment", some report a positive number. The more conservative include an opportunity cost with a very narrow definition. I would offer the opinion that saving AIG was the right thing to do but the following unintended consequence of zombie survivals has, so far, not been appreciated fully.
https://fas.org/sgp/crs/misc/R42953.pdf

"CBO does not, however, regularly perform cost estimates on Federal Reserve actions."
Perhaps somebody should.

Sunrider

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Re: AIG - American International Group
« Reply #1982 on: October 29, 2018, 12:14:09 PM »
So at what point does this / the warrants become attractive again. If I recall the discussion here correctly, the BV is still somewhere around 70, so the last months' drop seems a bit excessive, unless you think their numbers are completely made up?

valueyoda

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Re: AIG - American International Group
« Reply #1983 on: October 29, 2018, 02:44:26 PM »
I don't get it why you are interested in the warrants at this point, when you can replace the warrants with Leaps for a far lower price (even when you take into account a strike price reduction due to excess dividends).  The LEAPS are getting interesting though, even though AIG's operational performance has been poor for years now.

indirect

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Re: AIG - American International Group
« Reply #1984 on: October 29, 2018, 08:51:08 PM »
 Warrants has volume, Leaps doesn't

Cigarbutt

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Re: AIG - American International Group
« Reply #1985 on: December 13, 2018, 04:20:53 AM »
So, the question is: Can AIG turn the corner?
The company says yes and good things are on the way.
But which corner are we talking about?

Recently AIG "pre"-announced some poor results which point to a mix of retention reaching their limits and covers running out. Q4 will be interesting to dissect.
https://www.reuters.com/article/us-aig-ceo-outlook/aig-hit-with-750-million-to-800-million-in-fourth-quarter-catastrophe-losses-ceo-idUSKBN1O41ZO

A way to assess turnarounds is to try evaluating the culture.
A few days ago, AIG quietly returned to the CLO market. 500M is pocket change for them in their portfolios but this alone tells me that AIG may become an interesting opportunity but at much lower levels.
https://www.thinkadvisor.com/2018/12/12/aig-returns-to-clo-market-with-first-post-crisis-d/