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AIG - CEO Stepping Down and Ongoing Accounting Problems |
HenryTo
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 Posted: Mon Mar 14, 2005 7:20 am Post subject: AIG - CEO Stepping Down and Ongoing Accounting Problems |
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Just reported this morning... looks like we are near the end of the chapter for the "Greenberg Insurance Dynasty?"
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Report: Greenberg May Step Down As AIG CEO
Monday March 14, 7:46 am ET
Report: Maurice Greenberg Plans to Step Down As CEO of AIG Amid Regulatory Inquiries
NEW YORK (AP) -- Maurice R. Greenberg is planning to step down as chief executive of American International Group Inc. as early as this week amid concern over a rising number of regulatory inquiries at the financial services titan he built over nearly four decades, The Wall Street Journal reported Monday.
The Journal, citing unidentified people familiar with the matter, said the board is close to selecting Martin Sullivan, a co-chief operating officer and vice chairman, as chief executive.
The newspaper said the AIG board meet all day Sunday to hammer out the terms of Greenberg's retirement as chief executive. It said under once scenario, Greenberg would stay on as chairman.
An AIG spokesman, Chris Winans, declined to comment to the newspaper except to say that "the board has taken no action." He also told the newspaper Greenberg wasn't available for comment Sunday night.
If Greenberg steps down as CEO, it would be the third such high-profile departure in recent weeks. The boards of Hewlett-Packard Co. and Boeing Co. have recently forced out CEOs.
The Journal said Greenberg joined AIG in 1960 and became president in 1967 when it was a seller of property-casualty insurance in the U.S. and long-time life-insurance business in Asia. It has grown into one of the world's most powerful financial-services companies with a market capitalization of $168.5 billion. Greenberg is one of the company's largest individual shareholders, the newspaper said.
But the company has been the focus of an investigation into bid-rigging by insurance brokers and has been under a separate investigation by regulators for the sale and possible use of products that critics say could be used to manipulate earnings.
AIG reached a $126 million settlement with federal prosecutors and the Securities and Exchange Commission in November, ending a federal criminal inquiry into its role in helping a cellphone distributor disguise a trading loss with what authorities said was a loan portrayed as insurance. Under that settlement, an independent monitor is examing AIG's books to see if there are any other questionable deals.
AIG, without admitting or denying guilt, also settled civil-fraud charges with the SEC, paying a $10 million fine.
Currently, New York Attorney General Eliot Spitzer, federal prosecutors and the Securities and Exchange Commission are probing a transaction between AIG and Berkshire Hathaway Inc.'s General Reinsurance unit four years ago.
Last edited by HenryTo on Tue Apr 26, 2005 7:09 am; edited 1 time in total |
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AIG - CEO Stepping Down and Ongoing Accounting Problems Replies |
HenryTo
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| Posted: Fri Feb 24, 2012 12:29 pm Post subject: |
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Morningstar on AIG's 4Q earnings.
| Quote: | | Even after excluding a massive deferred tax asset valuation allowance release of $17.7 billion, American International Group AIG reported better earnings in the fourth quarter. Aftertax operating income was $1.6 billion, or $0.82 per diluted share, driven primarily by operating income in AIG's SunAmerica domestic life insurance unit and a positive mark to market of its one-third interest in pan-Asian insurer AIA Group. Prior-year comparisons at the holding company level are somewhat meaningless, given the number of actions AIG undertook in 2010; however, the operating companies remain intact, allowing for some comparison with last year. Chartis, AIG's international property-casualty insurer, reported a large underwriting loss from catastrophe events. Commercial insurance lines reported a combined ratio (expenses divided by earned premium) of 110% for the fourth quarter and 112% for the year. The largest claims totaling $2.6 billion were mostly in the Pacific Rim, specifically Japan, New Zealand, and Thailand, although losses in the United States from Hurricane Irene and Midwest tornados contributed to the loss. Excluding catastrophe losses, commercial lines still had a 105% combined ratio in the fourth quarter and 102% for the year. Personal lines fared a bit better with a 102% combined ratio in the fourth quarter and break-even for the entire year. For all property-casualty, adverse reserve development was absent this year. In the fourth quarter of 2010, AIG reported a $4 billion charge for adverse reserve development. SunAmerica had $930 million in fourth-quarter aftertax operating income, down 10% on a year-over-year basis. This year's fourth quarter benefited from a $213 million litigation settlement. Quarterly individual life insurance sales were up 9% on a year-over-year basis, and the company reported a surge in variable annuity deposits. ILFC, AIG's aircraft leasing subsidiary, reported a profitable fourth quarter although the $1.5 billion impairment charge in the third quarter drove the yearly loss to about $1 billion. Mortgage insurance operations continued to show a loss, although new insurance written in fourth quarter was probably the most of any mortgage insurer in the industry. Although the recent quarterly results show some improvement, we are still cautious on AIG. P&C operations are showing progress, but current underwriting income is still below industry norms. Life insurance lines are performing adequately, but this line of business is our least favorite in the insurance sector as it is prone to price-taking and risk-assumptive behavior that can weigh on future results. We expect that AIG will probably unload its aircraft leasing business at the first favorable opportunity, which we think would be a plus for shareholders. The mortgage insurance lines give us pause because the ultimate outcome of the foreclosure crisis has yet to be resolved. While AIG has vastly improved since the financial crisis, we still think it has a ways to go and we think uncertainty remains very high. Our fair value estimate is unchanged. |
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HenryTo
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| Posted: Fri Aug 05, 2011 1:20 pm Post subject: |
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Morningstar on AIG's 2Q earnings:
| Quote: | | American International Group AIG showed signs of improvement in its second quarter as it reported net income of $1.00 per diluted share. Aftertax operating income, which excludes a number of one-time charges, came in at $0.69 per diluted share, substantially below market expectations. Both of AIG's core insurance operations, Chartis (property-casualty) and SunAmerica (life), reported positive operating income as did its financial services segment, which includes aircraft leasing subsidiary ILFC. Factoring out catastrophe losses, which hit most of the entire property-casualty industry in the second quarter, Chartis reported a combined ratio (expense divided by earned income) of 98% with no significant adverse reserve development, a mediocre result. SunAmerica's pre miums, deposits, and other considerations were up 24% from last year's quarter as both fixed annuities and variable-annuity deposits showed improvement. Variable-annuity deposits were up 68% year over year. ILFC's results were a little less positive because of one-time charges, mainly from reduction in debt and impairments. AIG's parent company operations realized a $1.5 billion addition to income from the one third minority interest it still holds after the spin-off of Asian insurer AIA last year. Subsequent to the closing of the second quarter, AIG announced that it has received approval from Taiwanese regulators to sell its 98% interests in Nan Shan Life Insurance Company for about $2 billion in a deal that is expected to close in the third quarter, the proceeds of which will be used to pay down government interests in equity. Although second-quarter earnings showed progress, AIG is still a work in process, in our view. Annualized return on equity is still around 7%, and it may be premature to assume that there will not be more property-casualty adverse reserve development in the future. Furthermore, most life insurers are also reporting similar increases in annuity sales, a trend that will probably end soon. Finally, we have concerns that AIG could be stretching for yield in its investment portfolio, which increases risk to future earnings. Our fair value estimate is unchanged. |
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rffrydr
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| Posted: Fri Aug 05, 2011 12:31 pm Post subject: |
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CEO Robert Benmosche declared that AIG's crisis is over. He made that declaration based on the fact that the company issued 100 million shares, the Treasury terminated its Series G preferred holding and that AIG has no direct obligations remaining to the federal government. The company's book value (if you can believe it) was up 2% sequentially, to $49.18
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HenryTo
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| Posted: Fri Aug 06, 2010 1:06 pm Post subject: |
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AIG's latest 2Q results, courtesy of Morningstar:
| Quote: | | American International Group AIG reported second-quarter 2010 results that included stable incoming premium as well as operating income in its general insurance units, and a profit in its financial services operations. The second-quarter earnings release from the company added a new statement to a summary paragraph from the first quarter, with the new material stating that the firm has "commenced discussions" with relevant U.S. federal government stakeholders to repay large capital infusions, and have the government exit its ownership position. While discussions like this have been underway informally for some time, the formal statement suggests that the stabilization--if not progress--in AIG's underlying businesses is sufficient for the government to take this action. The general insurance operations will be key to the AIG's common shareholders' future returns. Pretax operating income in general insurance came to nearly $1 billion in the second quarter, down fractionally from a year ago, but a somewhat improved result from catastrophe loss-depressed first-quarter income of $900 million. At this stage, these operations didn't need a large hit from the Deepwater Horizon disaster or other catastrophe losses, and while AIG's Chartis unit did incur some losses from a variety of disasters in the first half of the year, they appear manageable. The overall combined ratio (underwriting losses and related expenses as a share of premium) rose slightly above 100% given those losses. Pretax operating income in life operations was flat with the first quarter, while the financial services segment turned an operating profit after significant continuing losses in the first quarter. AIG's book value per share rose from $37 at the end of the first qua rter to $46 per share in the second quarter, on a diluted basis, adjusted for the U.S. Treasury stake in the company. AIG remains a highly leveraged enterprise, whose common shareholders still face highly uncertain prospects. One continuing uncertainty is how disciplined AIG has remained in underwriting general insurance services, given the severe task it had in maintaining customer confidence and incoming premium in the past two years. But on the surface, the reported results thus far this year suggest some stabilization at the least. Other uncertainties include the liquidity of capital markets, and demand for units of the company to be sold or otherwise liquidated to pay back the Federal Reserve Bank of New York and the U.S. Treasury, but the formal statement the concrete discussions have "commenced" is a hopeful sign on this score. |
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rffrydr
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| Posted: Wed Jun 02, 2010 6:48 am Post subject: |
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Well the Pru deal is off....leaving an emaciated leveraged play on the market 
And it comes with asia exposure--and breakup value:
| Quote: | Highlighting the obvious value in the business, if we applied a similar 13x new business
multiple to Pru’s Asian business that was implied by the revised $30.4bn offer for AIA
we achieve a valuation for PAC (Pru’s Asian operation) at c£12.6bn. Given the current
market cap of £14.6bn this would imply that the value of the UK and US operations at a
mere £2.0bn. Based on 2009 published Embedded Values this would imply that the UK
and US operations would be trading at around a 75% discount to Embedded Value net
of all debt and the small pension fund deficit. The table below highlights the value of
Prudential (890p/share) based on the Asian operations on a 13x multiple, the UK at 1x
and US at 3x.
BE
Break up – Although we have a 955p break up valuation on Prudential we do not think
that Pru is an immediate break up candidate given the current investment markets. In
addition although it may have a couple of ready buyers in the wings, the UK operation is
likely to stay within the group in the short term as it drives cash flow for the growth
business in Asia.
BE
Recommendation – We think that Pru will need to clarify its strategy going forward
(plan A) and re engage with its shareholder base. Concerns over the future of the UK
operation will need to be addressed not least because of the knock on effect that this will
have had on its UK distribution and customer base. Although there was clear strategic
logic for the acquisition, we suspect that the way forward will be to list the Asian
operation to realise its true value. This may be the one positive to have come out of this
foray. |
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rffrydr
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| Posted: Fri May 07, 2010 7:07 am Post subject: |
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Chalk up another profitable quarter. If they can get out of govt. hands Wall St. will feel it's own again.
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rffrydr
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| Posted: Tue Apr 20, 2010 3:08 pm Post subject: |
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AIG enjoyed a sharp if short-lived spike on the Goldman CDO suit on friday and it's now announced that they too will be suing. We're rallying again. --Considering a bet that they come up feathers.
I continue to believe that these front-loaded CDO's are few and far between and that few will have the resources to press against the trend in rulings favoring defendants this past year. The long trail of courtroom maneuvering between the Banks and Monolines is the most probably result.
Already substantially long (utilitiy) financials this may be an interesting "hedge" --and backdoor play on china selloff. AIG, as far as brand goes, is asian. And I suspect much of the retail money picking up this "trash" from that region. (I personally know of one million-dollar purchase fall '0 . The rally here began once asian interests started paying up for AIG's assets. The hollowing out is probably premature and driven from Washington. Good-enough will be the model for AIG for the foreseeable future and Fannie/Fredie-like overhang of Govt. sell offer will limit upside.
Already the conflicts of interest are poking their heads:
| Quote: | MetLife, Inc. and American International Group, Inc. Deal May Be Paused By Tax Dispute-Reuters
Wednesday, 17 Feb 2010 01:19am EST
Reuters reported that, according to the Wall Street Journal, the pending $15 billion sale of a unit of American International Group, Inc. (AIG) to MetLife, Inc. may be pushed back by a tax dispute that may require a ruling from the Internal Revenue Service. The paper, quoting people familiar with the matter, said the problem was a dispute about whether AIG's unit American Life Insurance Co (Alico) will remain exempt from a 2004 IRS ruling. The ruling requires insurers to withhold U.S. taxes on income distributed to foreign clients who own their annuities and life-insurance products. The government controlled insurer has asked the IRS for a 'private letter ruling' to confirm its interpretation that Alico is exempt from the U.S. tax withholding requirement. It said the tax issue could put the Department of the Treasury, as overseer of the Internal Revenue Service, in an awkward situation. Treasury officials have told AIG that the Company will not get any special treatment from the IRS. |
Looking to short AIG basis 1220 SP and the surfacing of more Goldman bearishness.
http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1271361600000&chddm=52098&chls=IntervalBasedLine&cmpto=NYSE:CAF&cmptdms=0&q=NYSE:AIG&ntsp=0
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HenryTo
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rffrydr
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| Posted: Tue Mar 02, 2010 10:25 am Post subject: |
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Driving Sterling so large this asia sellout for AIG. Taxpayers rejoice, we are getting more than a fair price and considering the latest from HSBC and china tightening I'm counting myself lucky.
The ICAP analysis courtest Alphaville:
| Quote: | While commentators may applaud the transaction combining number one and two insurers in Asia, we have a lot of sympathy with the statement that AIG got more from Prudential that they would of done from an IPO. Given Prudential’s EV assumptions of 5.7% discount rate in Hong Kong and the 1.69x multiple paid (42% of AIA’s EV is Hong Kong) this does not seem a cheap acquisition. Axa’s offer to Asia Pacific and other deals need to be viewed in this context (Axa Asia uses a 10% discount rate, making its 2.7x offer broadly equivalent to 1.7x in this case in our opinion).
BE The AIA transaction may bring long term value to the group in excess of the $35bn paid, however it seems in the near term it has brought a lot of additional risk to the group with the capital position “A” range post the transaction and a very large rights issue which will make the share price highly geared to market conditions. Prudential have committed to the same dividend policy on the combined group. Cash flow is now under strain given the maintained dividend policy post transaction with and we estimate £500m pa negative cash impact from the deal. In our view Prudential’s share price could suffer considerably if concerns over a double dip in the economy emerge, given the asset risk in AIA which we look at in detail..
BE We see quite a difference between Prudential’s equity linked business in Asia and AIA’s mainly traditional and protection business. Prudential has in the past stressed the strength of equity linked business over the higher guarantees based traditional products, now it has bought the largest provider of these products reflecting the fact that their own business is moving away from the equity linked market. However AIA’s new business margin is 31% post tax compared to 57% pre tax at Prudential. A potential turnaround story hardly feels consistent with a 1.69x EV purchase price. We are also concerned that with 21% of the EV from Thailand, political risk may not be priced in. Thai stocks trade at around 10.6x ’11 to reflect this risk, not the 24x paid here.
BE While we feel management are probably holding back in terms of synergies, and possible tax gains from a future redomicle, this seems to be a growth market price for business in uncertain times. Our expectation is that in the next few weeks Prudential’s share price, will underperform given the high price paid, high risk nature of the share due to the need to fund the large rights issue. |
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rffrydr
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teenwolf41
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| Posted: Fri Jul 31, 2009 8:12 pm Post subject: |
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| I think AIG should just be removed so I don't have to look at it on the ticker on CNBC anymore |
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rffrydr
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HenryTo
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| Posted: Wed Jul 01, 2009 12:51 pm Post subject: |
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More details on how the AIG FP Group's unwinding was handled:
http://www.bloomberg.com/apps/news?pid=20601109&sid=afDX3.N1Kdgw
| Quote: | Another group of traders worked for eight weeks to put together data on the risk-reward dynamics of a group of 50-year derivatives linked to the Austrian stock market. A nonbank financial institution expressed interest in taking over the trades, yet said it lacked the trading expertise to manage them. Pasciucco offered the buyer the expertise of several AIGFP employees to do the job.
“That solves a problem for me, too,” Pasciucco says. “I move a bunch of people off the payroll.”
Pasciucco expects to get out of the vast majority of AIGFP’s positions by year-end. If necessary, he may shepherd any remaining trades to the parent company. He plans to leave by the end of 2009, whatever happens, to go back to Wall Street, work at a hedge fund or write a book.
Meanwhile, the AIG fiasco has helped inspire a raft of new plans to regulate derivatives. Under pressure from the administration of U.S. President Barack Obama, derivatives dealers in March began moving the most actively traded contracts through a new clearinghouse operated by Atlanta-based Intercontinental Exchange Inc. Dealers also agreed to make public all derivative trades in the CDS market by July 17. |
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rffrydr
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