AIG Stock Gains, Reportedly Considers Sale of Life Blocks
NEW YORK (TheStreet) -- American International Group (AIG) - Get Report stock is up 0.84% to $63.68 in early-afternoon trading Friday as the New York City-based insurer weighs selling blocks of life policies, sources told Bloomberg.
AIG has been facing pressure from activist investor Carl Icahn to better its returns.
The company also is considering the exit of some books of insurance contracts in an effort to heighten its focus on businesses that can increase its profitability, Bloomberg reports.
CEO Peter Hancock will update investors before reporting 2015 fourth-quarter financial results, according to Bloomberg. Hancock is expected to demonstrate how he will improve returns while rejecting Icahn's proposal that the company split into three entities.
Separately, TheStreet Ratings team rates AMERICAN INTERNATIONAL GROUP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate AMERICAN INTERNATIONAL GROUP (AIG) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- AIG, with its decline in revenue, slightly underperformed the industry average of 15.5%. Since the same quarter one year prior, revenues fell by 18.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- AMERICAN INTERNATIONAL GROUP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, AMERICAN INTERNATIONAL GROUP reported lower earnings of $5.21 versus $6.07 in the prior year. For the next year, the market is expecting a contraction of 17.8% in earnings ($4.29 versus $5.21).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Insurance industry. The net income has significantly decreased by 110.5% when compared to the same quarter one year ago, falling from $2,192.00 million to -$231.00 million.
- You can view the full analysis from the report here: AIG
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.