Earnings Preview : American International Group, Inc. (NYSE:AIG) First Quarter 2010
Tuesday, May 04, 2022 9:44 AM

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American International Group, Inc (NYSE: AIG) is expected to report their first quarter 2010 results on Friday, May 7, 2010.

American International Group, Inc. (AIG), is a holding company, which through its subsidiaries, is engaged primarily in a range of insurance and insurance-related activities in the United States and abroad. AIG's four reportable segments include: General Insurance, Domestic Life Insurance & Retirement Services, Foreign Life Insurance & Retirement Services, and Financial Services. In March 2010, the Company closed the sale of a portion of its asset management business to Pacific Century Group.

For the fourth quarter, net loss attributable to AIG significantly narrowed to $8.87 billion or $65.51 per share from $61.66 billion or $458.99 per share in the previous year. The New York-based company's net loss from continuing operations were $8.02 billion, narrower than $61.77 billion a year ago. AIG posted $65.51 Q4 loss vs. $458.99 loss. In 10-K, the company noted it may need additional support from the U.S. government. Notes without additional support from the U.S. government, in the future there could exist substantial doubt about its ability to continue as a going concern.

For the 1st qtr 2010, analysts' estimates range from $0.38 to $0.57, with a consensus estimate of $0.475. The consensus EPS forecast has increased over the past week from $0.205 to $0.475 (131.71%) and decreased over the past month from $0.730 to $0.475 (-34.93%). Of the 2 analysts making quarterly forecasts, 1 raised and 1 lowered their forecast.

Published unconfirmed reports in The Financial Times claim AIG may pursue legal action against Goldman Sachs over losses it incurred insuring some $6 billion of collateralized debt obligations (CDOs) issued by GS. I was not surprised by this news, and believe that AIG will receive some loss recovery which may help buoy the shares. Published, unconfirmed reports in the NY Times indicate the U.S. government is planning to shed its preferred ownership stake in AIG. I believe underlying fundamentals remain weak and my calculation of 12/31/09 tangible common equity was a negative $179 a share. The reported government action could be highly dilutive to common shareholders.

Last month, financial press reports indicate that AIG's airline leasing unit agreed to sell 53 planes to Macquarie Group Ltd. for $2 billion in cash. Progress made selling off assets (often higher quality assets) aids AIG, but the sale price which is less than the book value is not encouraging. On Friday, the stock closed trading at $38.9 compared to the 52 week range of $8.22-$55.9. In the last three months, the stock gained around $14.93 or 62.29%. However, earnings may not support a price in excess of $33 by end 2010.

 

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