This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Insurance Companies Rebound: Will Stocks Like AIG Reach Their Former Glory?

Stocks in this article: AIG FIG YHOO

Chris Lau, Kapitall: AIG – hit hard by the financial crisis – recently closed out near a 52-week high. Is insurance on the rise?

Ever since AIG (AIG) bottomed out during the height of the financial crisis, the company has undergone extensive restructuring. And as late as 2011 AIG was fraught by scandals over toxic assets and executive pay. 

Now there is evidence that the stock might finally have started to recover - it recently closed at $52.30 - near a 52-week high. AIG continues to clean up its balance sheet by selling non-core assets. By focusing on its core competency, AIG is showing how companies can potentially rise from the darkest days of the recession to the cusp of profitability. 

Upcoming catalysts

AIG is trying to sell one of its divisions, the International Lease Finance Corporation (ILFC) to a Chinese investment fund, P3. If successful, P3 will take ownership of ILFC. This would remove the uncertainty around AIG instead selling it through an IPO. 

Whether ILFC is sold or spun off as a public company, both outcomes could further support a higher valuation for AIG. An investor need only look at the impact of Alibaba’s IPO on one of its parent companies Yahoo (YHOO) to support this case.

[Read more from Kapitall: Alibaba IPO Coming to New York, But Should You Buy?]

Other investing ideas

Sentiment is shifting towards the positive for many insurance and credit stocks. Springleaf Holdings (LEAF) closed yesterday at $20.20, which is far higher than its IPO pricing of $16. The company is a subprime lender to consumers with interest rates as high as 36%.

AIG (through AIG Capital Corporation) and Fortress Investment (FIG) have a joint venture with Springleaf. In 2010, AIG sold 80% of its holding in Fortress for $125 million – a stake now worth $1.68 billion. So maybe the real winner from the Springleaf IPO is Fortress?

Click on the interactive chart to view monthly returns over time. Data for LEAF not yet available.

Insurance firms seem to be performing well overall. Health insurance stocks in particular have profited off of Obamacare - as investors eye millions of new subscribers who will be brought into plans.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs