AIG Continues To Rally
Wednesday, March 10th, 2010
Shares of insurance giant American Insurance Group (AIG) continued to rally today. AIG is up over 12% today in early trading rising to $36.80 per share. The move higher may be based on greater investor confidence or simply be a short squeeze. Investors had a 30% short interest in AIG during the month of February.
In the past few months AIG has announced deals to sell 21st Century Insurance, Nan Shan Life, AIG Finance, AIG Life, FP energy investments, Hartford Steam, Unibanco, Transatlantic Holdings, asset management business, and office building. AIG is expected to generate $11 billion dollars from these transactions for the insurance giant. These sales are just the tip of the iceberg for AIG.
This past Monday AIG agreed to sell American Life Insurance Company to Metlife in a $15.5 billion dollar cash and stock deal. $6.8 billion will be in cash and the remaining $8.8 billion will be in Metlife stock. This move comes on the heels of AIG's $35.5 billion dollar sale of American Insurance Assurance Lts. (AIA) to Prudential PLC. AIG stands to gain $31.8 billion in cash from the two asset sales.
The asset sales will make it easier to repay the federal government which owns approximately 80% of AIG. However it remains to be seen what kind of company AIG will become in the future since the insurance company has sold off its most valuable assets. It will be interesting to see which direction AIG shares take over the coming month.
Article by Mark Riddix
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
Tags: aig , american insurance group , asset sales , insurance industry
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