(AIG) American International Group – Bear of the Day

American International Group’s (AIG) third-quarter loss came in significantly worse than the Zacks Consensus Estimate and year-ago quarter based on weak global cues, sluggish insurance dynamics and consistent cash outflow. Although some stability was witnessed in core operations, it failed to evade the book value per share reduction.

The lock-in period for stock offering further holds back the attainment of capital flexibility in the near term. Higher restructuring charges and increasing losses from catastrophes, underwriting and investments along with adverse reserve developments are also negatively affecting the stock price. Asset disposals and repayment of a chunk of debt appears to be favorable for the new stock buyback program.

AIG is poised to accentuate its operating and capital leverage upon dilution of government stake, though it is a far-fetched goal due to the absence of any growth catalyst. Risks of execution amid intense competition also prevail.

AMER INTL GRP (AIG): Free Stock Analysis Report

Zacks Investment Research

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