American International Group Inc
Berkshire Takes a Hit on Insurance and BNSF Performance in 1Q16
Berkshire Hathaway missed its operating EPS analyst estimate of $2,609 and reported $2,275, mainly due to its Insurance and BNSF segments.
AIG Returned $2.6 Billion to Shareholders in 3Q16
AIG declared its quarterly dividend of $0.32 per share in 3Q16 totaling ~$338 million, translating into an annualized dividend yield of 2.2%.
Why direct bidding was strong for the 10-year T-notes auction
The US Department of the Treasury holds a ten-year Treasury (IEF) notes auction every month. The ten-year Treasury (UST) yield is a benchmark yield for financial markets.
US Banks Are Optimistic about the New Tax Plan
Despite the $32.9-billion hit the top five banks took in their fourth-quarter earnings, US banks (XLF) are generally very positive about the new tax plan.
Genworth’s Third Quarter Earnings Miss Analysts’ Expectations
Genworth Financial (GNW) reported its third quarter earnings on October 30, 2015. The company reported operating EPS of $0.13, well below analysts’ estimates of $0.22.
AIG’s Shareholder Payouts Rise on Higher Investment Income
In 1Q17, AIG repurchased ~56.0 million shares, or 5.5% of its total outstanding shares, for a purchase price of ~$3.6 billion. The company made additional repurchases of ~$1.1 billion through May 3, 2017.
AIG’s Stock Benefits from De-Risking of Balance Sheet
During the first quarter of 2015, AIG (AIG) took further actions to simplify its balance sheet and reduce risk.
Gauging Berkshire’s Services and Retail Growth in 4Q
Berkshire Hathaway’s (BRK-B) services and retailing division is expected to garner marginal growth in 4Q16, sequentially as well as YoY.
AIG to Reward Shareholders at a Similar Pace in 2017
In 3Q16, AIG declared a quarterly dividend of $0.32 per share totaling $338 million, translating into an annualized dividend yield of 1.9%.
Bid-to-Cover Ratio Rose for 2-Year Floating Rate Notes
The U.S. Department of the Treasury introduced two-year FRNs (floating rate notes) in January 2014. An FRN is a debt security. Its interest payment varies.
Why demand is rising for 3-year Treasury notes
The U.S. Department of the Treasury holds auctions for three-year Treasury notes (or T-notes) each month. Three-year notes are at the short-end of the yield curve.
Why the Bid-to-Cover Ratio Rose for 2-Year Floating Rate Notes Auction
The US Treasury introduced two-year floating rate notes (or FRNs) in January 2014.
Must-know 3Q updates from Dan Loeb’s Third Point Partners
In this series Activist investor Dan Loeb’s fund, Third Point Partners LP, disclosed some of the positions traded during 3Q14 in its 3Q investor letter. In this series, we’ll go through the details of these positions and Third Point’s rationale for adding or exiting its stakes. In its 3Q letter, the fund said it “continued […]
American Airlines gets significantly lower position in Appaloosa
Appaloosa Management significantly lowered its position in American Airlines (AAL) in the third quarter that ended in September 2014. The position accounts for 3.81% of the fund’s total third-quarter portfolio.
Why Fairholme Capital lowers stake in Leucadia National
Fairholme Capital lowered its position in Leucadia National in 2Q14. The position currently accounts for 4.14% of the fund’s portfolio.
Market Participants Make a Beeline for 2-Year Floating Rate Notes
The US Department of the Treasury introduced two-year FRNs (floating rate notes) in January 2014. An FRN is a debt security. Its interest payment varies.
An Update on Fairholme’s Positions in Fannie Mae and Freddie Mac
Berkowitz believes that Fannie Mae and Freddie Mac entities are highly valuable and expects them to generate earnings of at least~$21 billion a year.
Baupost Group opens PBF position, raises MU and THRX share, and sells AIG, AUY, and KGC—13F Flash F
The Baupost Group, LLC, is a hedge fund founded and run by Seth Klarman in 1982. Why sell Kinross Gold Corp. (KGC)?
Analyzing Alternative Mutual Fund MERFX: How Did It Perform?
The Merger Fund (MERFX) is an alternative smart beta fund that uses the popular hedge fund strategy “merger arbitrage” to gain profit in the market S&P 500 (SPY).
Direct Bidders Flocked to 2-Year Floating Rate Notes Auction
The U.S. Department of the Treasury introduced two-year floating rate notes (or FRNs) in January 2014. An FRN is a debt security. Its interest payment varies, hence the name.
Why Atlas Air Worldwide’s transformation will boost its earnings
Atlas Air Worldwide (AAWW) is an outsourced global provider of aircraft and aviation operating services for airlines, express delivery providers, freight forwarders, the United States military, and charter brokers.
Baupost Group opens PBF position, raises MU and THRX share, and sells AIG, AUY, and KGC—13F Flash D
The Baupost Group, LLC, is a hedge fund founded and run by Seth Klarman in 1982. Why sell American International Group (AIG)?
High Discount Margin: Highest Ever for 2-Year Floating Rate Notes
The US Department of the Treasury introduced two-year FRNs (floating rate notes) in January 2014. An FRN is a debt security. Its interest payment varies.
Baupost Group opens PBF position, raises MU and THRX share, and sells AIG, AUY, and KGC—13F Flash E
The Baupost Group, LLC, is a hedge fund founded and run by Seth Klarman in 1982. Why sell Yamana Gold Inc. (AUY)?
Prudential’s Individual Annuities and Life Business
Prudential Financial’s (PRU) individual annuities segment’s adjusted operating income rose by $119 million to $541 million in 4Q17 from $422 million in 4Q16.
Maverick Capital Extends Its Position in Northstar Realty Finance
Maverick Capital increased its position in Northstar Realty Finance (NRF) by more than $21 million in stock. Northstar represented 1.06% of the fund’s total portfolio in 4Q14.
AIG Hires Marketing and Communications Head
In American International Group’s (AIG) General Insurance segment, North American net premiums fell between 2016 and 2017, from $13.9 billion to $11.4 billion.
An Investor’s Guide to Top-Performing Stocks for 2020
Overall, tech stocks turned out to be the top performers for 2019. The gain in the technology sector helped the S&P 500 gain 29% in 2019.
Demand Nose-Dived for Two-Year Floating Rate Notes Auction
Market demand for two-year floating rate notes in September fell sharply to 24.7% of the accepted competitive bids—its lowest mark ever—compared to 43.6% at August’s auction.
AIG Valuations Low on SIFI, Operating Performance, Restructuring
American International Group’s (AIG) stock has declined by more than 13% over the past six months, mainly due to weak operating performance, higher reserve developments, and declining returns on alternative investments.
Major Movers of the Financial Markets in the Past 20 Years: Part 2
The global financial crisis of 2008 proved to be the major mover of the financial markets in the last 20 years. Internet companies and the banking sector took a beating.
AIG’s Commercial Insurance segment sees increased income
AIG’s top line dipped marginally in 4Q14 when compared to 4Q13, driven by disciplined sales and underwriting in casualty products in commercial P&C.
Must-know: Highlights of the 6-month Treasury bills auction
Last week, the U.S. Treasury auctioned six-month T-bills worth $24 billion. Auction demand was higher. The bid-to-cover ratio increased by ~7.4% to 4.6x week-over-week.
2-Year T-Notes Attract Higher Market Demand in March 2015
Primary dealer takedown was lower due to higher market demand. It was 36% of competitive accepted bids—down from 38.5% in February’s auction.
AIG improves its capital structure in 4Q14
AIG repurchased $6.5 billion of high coupon debt, replacing it with lower coupon debt to help AIG reduce its interest burden by ~$249 million per year.
Bid-to-cover ratio for 3-month T-bills falls on higher issuance
Due to the higher issuance amount, demand for the bills was weaker, with the bid-to-cover ratio coming in at 4.56x, compared to 4.71x for the July 28 auction. The ratio has averaged 4.62x for auctions held in 2014.
AIG’s Commercial Insurance Business Improves in 1Q15
AIG (AIG) reported pre-tax operating income of $1.5 billion in 1Q15 for its commercial insurance business, as compared to $1.4 billion in 1Q14.
How Discounted Valuations Affected AIG in 3Q17
On an NTM (next-12-months) basis, American International Group (AIG) has a price-to-earnings ratio of ~11.6x compared to its peers’ average of ~13.9x, which implies lower valuations.
AIG Sees Contraction in Consumer Finance Division in 2Q15
AIG’s consumer finance business recorded a 9% decline in pre-tax operating earnings in 2Q15.
Why market demand for 13-week Treasury bills sees little change
Due to the higher issuance amount, demand for the bills was weaker, with the bid-to-cover ratio coming in at 4.65x, compared to 4.82x for the July 14 auction—the ratio has averaged 4.62x for auctions held in 2014.
Gauging AIG’s stock performance and valuation
AIG’s shares appear to be currently undervalued despite the improvements in its operating and financial metrics.
What Drove Berkshire’s Services and Retailing Business?
In 3Q16, Berkshire’s (BRK-B) revenues from its Services and Retailing division fell to $6.3 billion in 3Q16 as compared to $6.1 billion in 3Q15.
Analyzing AIG’s Individual Retirement Business
American International Group’s (AIG) Individual Retirement business posted pretax operating income of $1.8 billion in 9M17 versus $1.7 billion in 9M16, reflecting a rise of 5.0%.
NXP Semiconductors is Appaloosa Management’s new position
Appaloosa Management initiated a new position in NXP Semiconductors NV (NXPI) in the third quarter that ended in September 2014. The position accounts for 2.55% of the fund’s total third-quarter portfolio.
Chesapeake Energy is Fairholme Capital’s new position
Fairholme purchased ~537,000 shares of Chesapeake Energy Corporation (CHK) for $12.3 million in 3Q14. It now accounts for 0.16% of the portfolio.
MetLife’s Performance in Europe, the Middle East, and Africa
Marginal fall MetLife’s (MET) operating earnings in the EMEA (Europe, the Middle East, and Africa) region fell from $74 million in 3Q16 to $71 million in 3Q17. Its total EMEA operating revenue fell from $702 million to $711 million, primarily due to higher premiums. In the EMEA region, MetLife’s premiums rose to $527 million from $500 million between 3Q16 […]
AIG Posted a Huge Loss in 4Q17
AIG (AIG) reported a net loss of $6.66 billion in 4Q17—compared to a loss of $3 billion in 4Q16.
Russia’s Plane Shot Down: Insurers Gain as Tensions Mount
Geopolitical tensions are mounting around the globe. Turkey shot down a Russian jet and Brussels remains on terrorism alert after the recent attacks in Paris.
Whirlpool’s position upped in Appaloosa Management
Appaloosa Management upped its position in Whirlpool Corporation (WHR) in the third quarter that ended in September 2014. The position accounts for 4.29% of the fund’s total third-quarter portfolio.
Appaloosa Management starts new position in Lorillard
Appaloosa Management initiated a new position in Lorillard Inc. (LO) in the third quarter that ended in September 2014. The position accounts for 1.25% of the fund’s total third-quarter portfolio.
6-month Treasury bill auctions see lowest coverage in over a year
The U.S. Department of the Treasury auctioned Treasury bills (or T-bills) worth $88 billion in the week ending October 24. Although auction demand was higher in absolute terms, the bid-cover ratio dipped, and market demand was lower due to lower indirect bidding.
The implications of higher yields at the 10-year Treasury auction
The ten-year Treasury (IEF) note auction is of great interest to stock and bond (BND) market participants. Ten-year Treasury yields are benchmarks for many interest rates, including mortgages (IYR)(VNQ) and equity risk premiums (QQQ).
Appaloosa exits position in Expedia
Appaloosa Management exited a position in Expedia, Inc (EXPE) in the third quarter that ended in September 2014. The position accounted for 0.99% of the fund’s total portfolio in the second quarter.
How insurers manage their capital requirements
A company managing higher risk products must maintain a higher level of minimum capital compared to a company with a relatively lower level of risk.
Underwriting profit: First leg of the profit machine
An underwriting loss is not unusual for an insurance company. In a soft pricing environment, pricing of P&C products is low due to intense competition.
How cost structures and distribution channels impact profit
As customers use Internet-based aggregators to purchase insurance policies, insurers use online sales to interact directly with customers and reduce costs.
How investment income drives profit
The impact of interest rate movements is lower in the P&C segment, as their products can be repriced annually to keep in line with interest rate movements.
How key drivers impact insurance sales
For P&C insurers such as AIG and ACE, various mandatory requirements may drive sales of vehicle, workers’ compensation, and homeowners insurance.
The US insurance industry: Largest in the world
Insurance premiums have grown at a modest pace after a dip in 2009 due to the financial crisis, which the industry was able to navigate.
Life insurance, P&C insurance, and reinsurance
P&C products have commoditized characteristics, resulting in sharp competition in the market and business cycles. AIG and ACE are key players in this space.
Making sense of an insurer’s liabilities
Policyholder liabilities, or policyholder reserves, represent the future claims that may arise for the pool of policies the insurer writes.
How valuation of insurance companies works
Financial market movements not only impact income from invested assets, but also the value of assets carried at fair value on an insurer’s balance sheet.
How insurers are targeting new growth avenues
US insurance M&A activity picked up in 2014 after a two-year dip, as insurers try to capture growth opportunities in domestic and foreign markets.
Why should you invest in insurance ETFs?
Insurance ETFs are poised to gain from industry growth. As interest rates improve, insurers should see better earnings due to higher investment returns.
Why did George Soros open a new position in Essent Group?
Essent Group Ltd. saw an IPO on October 31 2013 that raised $335 million. The company sold 19.7 million shares in the IPO at $17 per share.
What’s behind Berkshire Hathaway’s 1Q18 Losses?
Berkshire Hathaway announced its 1Q18 results on May 5. Buffett’s investment conglomerate posted a net loss of $1.1 billion, or $692 per share.
AIG: Who Were the Biggest Buyers?
T. Rowe Price Associates purchased 8.6 million AIG shares, which was the biggest transaction among the top investors.
Why Nokia Moved to Limit Its Exposure in Iran
Nokia says that it won’t accept any new business in Iran in 2019, adding that its operations in the country this year will be limited to delivering on existing contracts.
Why American International Group Inc. Is Down 3%
American International Group Inc. (NYSE: AIG) is down about 3% following its Q2 2018 earnings release. Here’s what you need to know.
Lower Claims, Pricing, Reinsurance Key to Berkshire’s Insurance
Berkshire Hathaway’s (BRK.B) Insurance segment saw subdued growth in the second half of 2017 on reinsurance losses.
Declining Claims Could Help Berkshire Insurance in Second Quarter
Berkshire Hathaway’s (BRK.B) Insurance segment has seen a volatile performance in the recent quarters owing to reinsurance losses and rising claims.
Berkshire’s Insurance Segment Benefits From Fewer Claims
In 1Q18, Berkshire Hathaway’s (BRK.B) insurance revenue fell YoY (year-over-year) to $14.6 billion from $22.9 billion.
How Wall Street Is Rating Berkshire Hathaway in 2018
Among major conglomerates and managers (XLF), Berkshire Hathaway (BRK.B) has a next-12-month price target of $349,000.
What to Expect from Berkshire Hathaway’s 1Q18 Earnings
In this series, we’ll look into Berkshire Hathaway’s 1Q18 expected divisional performance along with a variety of other factors.
Bank of America Fined for Fraudulent ‘Masking’ Scheme
The New York Attorney General fined Bank of America due to a fraudulent “masking” scheme in the bank’s electronic trading division.
What Analysts Are Saying about American International Group
In March 2018, American International Group (AIG) is being tracked by 18 analysts, seven of whom have suggested “holds” on the stock.
AIG Announces Changes in Leadership Positions
On March 1, 2018, American International Group (AIG) announced that changes had been made to its leadership positions.
What to Expect from the Insurance Industry in 2018
Emerging markets such as China provide a great growth opportunity for property and casualty insurers.
AIG Canada Made the Top 100 Employers List
AIG’s Canadian business unit, AIG Canada, announced on February 13, 2018, that it had made the list of Canada’s Top 100 Employers of the younger generation.
How Wall Street Analysts View Berkshire Hathaway
Analysts assigned four “strong buy” or “buy” ratings out of six for Berkshire Hathaway in February 2018.
Performance of Prudential Financial’s Life Planner Operations
The Life Planner operations generated adjusted operating income of $1.49 billion in 2017 compared to $1.53 billion in 2016.
What Are Wall Street Analysts Saying about AIG?
Of the 20 analysts that tracked AIG in January 2018, seven suggested a “strong buy,” and one rated the stock as a “sell.”
Understanding AIG’s Discounted Valuations after 4Q17
Analysts gave a one-year target of $67.93 on AIG stock, which reflects an increase of 14.3% from its current price of $59.43.
Analyzing AIG’s General Insurance Segment’s Performance
AIG’s International operations of its General Insurance segment posted an adjusted pretax loss of $399.0 million in 4Q17 compared to $441.0 million in 4Q16.
Analyzing AIG’s Institutional Markets Business Performance in 4Q17
AIG’s Institutional Markets segment witnessed a marginal rise in its net investment income from $152.0 million in 4Q16 to $160.0 million in 4Q17.
What Helped AIG’s Life Insurance Segment in 4Q17?
AIG’s Life Insurance segment garnered premiums and deposits of $963.0 million in 4Q17 compared to $911.0 million in 4Q16.
How AIG’s Group Retirement Segment Performed in 4Q17
AIG’s Group Retirement segment’s assets under administration (or AUA) stood at $103.8 billion on December 31, 2017.
The Performance of AIG’s Individual Retirement Business
In 4Q17, AIG’s pretax income stood at $474.0 million compared to $542.0 million in 4Q16.
Validus Acquisition: A Major Growth Opportunity for AIG
AIG’s enterprise-value-to-sales ratio is ~1.6x on an LTM (last-12-months) basis.
AIG Misses Earnings Estimates in 4Q17 after Catastrophe Losses
On February 9, American International Group (AIG) posted earnings per share of $0.57 in 4Q17, which missed the analysts’ estimate by $0.18.
Here’s What’s behind Chubb’s Net Income in 4Q17
Chubb’s (CB) net income in 4Q17 was $1.5 billion compared to $1.6 billion in 4Q16. It saw a rise in net premiums earned, from $7.1 billion in 4Q16 to $7.2 billion in 4Q17.
Chubb’s Performance in 4Q17: Earnings, Revenues
Chubb (CB) has reported 4Q17 EPS of $3.17, which exceeds analysts’ estimate by $0.88. The company’s core operating income in 4Q17 was $1.48 billion.
Strong Earnings Propel Stocks into Unchartered Waters
Last week, US stocks closed the week on a very strong note mainly driven by strong earnings growth. All 11 sectors in SPY reported positive earnings growth.
Why Is US Debt So High?
Most countries tend to issue debt to fund their deficits and keep paying interest on these borrowings. These revenues are generated through taxes from companies and individuals.
Underwriting May Help Berkshire’s Insurance Division
Claims could subside The insurance sector (IYF) faced headwinds and losses in 3Q17 due to hurricanes across the US East Coast. Berkshire Hathaway (BRK.B), AIG (AIG), Prudential Financial (PRU), MetLife (MET), and other reinsurers faced headwinds and underwriting losses in 3Q17, which were partially offset by gains from debt and equity investments. In 4Q17, claims are […]
What’s the Outlook for American International Group?
American International Group’s dividend per share rose 58% in 2016 and was flat in 2017.
Comparing AIG’s Ratings with Other Insurance Players
Of 20 analysts tracking AIG, seven suggested a “strong buy,” nine recommended a “hold,” one suggested a “sell,” and three rated AIG stock as a “buy.”
American International Group: New Chief Underwriting Officer
In January 2018, Tom Bolt will become AIG’s chief underwriting officer. Bolt has more than 30 years of experience in the reinsurance and insurance industry.
Behind AIG’s Life Insurance Division
AIG’s Life Insurance division generated other income of $34.0 million in 9M17 versus $43.0 million in 9M16, which implies a substantial 21.0% fall.
AIG’s Group Retirement Business Saw Rise in Premiums and Deposits
In 9M17 and 9M16, American International Group’s (AIG) Group Retirement business garnered $21.0 million in premiums, reflecting no change.