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NEW YORK (
AIG(AIG - Get Report) share repurchases were a big driver of the stock's 52% rise in 2012, but that trend will slow down in 2013, according to Wells Fargo analyst John Hall, who lowered his recommendation on the stock to "market perform" from "outperform" in a note published Thursday.
Hall writes that share repurchases were "a considerable source of shareholder value creation in 2012," but he expects buybacks to take a back seat in 2013.
"AIG has made clear that its near-term focus for capital management involves improving the company's interest coverage ratio," Hall states. He notes that AIG sold its remaining stake in Hong Kong-based AIA Group in December, but argues "much of these proceeds" will go to paying down debt or lowering its interest expenses. Hall lowered his expected valuation range on AIG shares to $38-40 from $44-49, while also trimming earnings estimates. AIG shares were down 0.06% in early trading Thursday to $35.74.
AIG has generated headlines in recent days as its board contemplated whether to join a lawsuit against the U.S. government and the Federal Reserve Board of New York and government by former Chairman and CEO Hank Greenberg contesting the terms of the bailout of the insurer in 2008. The company announced Wednesday afternoon, shortly before the market closed, that it would not join the suit.
Written by Dan Freed in New York.