NEW YORK (TheStreet) -- American International Group (AIG) - Get Report stock is down by 1.26% to $55.64 in midday trading on Monday after a report said the company will sell some of its mortgage insurance unit's shares to the public.
The New York City-based insurance company will still hold the majority stake in the unit, sources told the Wall Street Journal.
Activist investors such as Carl Icahn have pushed for the company to split into three parts.
The sale is part of management's effort to show that it is focusing on core operations, sources told the Journal.
Keefe, Bruyette & Woods analyst Meyer Shields does not believe the spinoff will be effective, Bloomberg reports.
"AIG's fundamental problem is very poor property and casualty profitability, and absent really fantastic price tags, we really don't see the point of selling better-performing businesses so it can buy back more shares of the remaining underperforming businesses," Shields said in a note, according to Bloomberg. "Mortgage insurer valuations have compressed significantly over the past two years, so the timing of this planned spinoff is also very far from ideal."
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rates this stock as a "hold" with a grade of C. 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. But during the past fiscal year, AIG reported lower earnings of $5.21 vs. $6.07 in the prior year. For the next year, the market is expecting a contraction of 19.2% in earnings ($4.21 vs. $5.21).
You can view the full analysis from the report here: AIG