John L. S.

American International Group ( NYSE : AIG ) Optimistic for their Future

by John L. S. May 11, 2009
dr.jpgStruggling insurance giant, American International Group ( NYSE: AIGAIG message board ), is now seeing any prospect of recovery as a long, multi-year process, as outlined by the company and its government owners.


An April 23rd internal American International Group memo was cited by the Wall Street Journal in describing ''Project Destiny'', the re-structuring initiative which will hopefully pave the road to their recovery. The memo detailed a 45 day review of the ailing company's businesses, and defined the project as an ''effort to redefine the future of most of the major businesses within AIG''.

With the company still deeply embroiled in their ''plans for the orderly sale of certain assets to repay the government'' as stated earlier in April by Edward Liddy (AIG's Chief Executive Officer and President), the ''Project Destiny'' memo doesn't, in my opinion, offer any real optimism as far as investors are concerned. Rather the revelation by AIG is that they still have rather a long way to go; although they finally seem to acknowledge this.

More optimistically, while last week they posted dismal first quarterly losses of $4.5 Billion, the results were still a substantial improvement over the $7.81 billion loss posted for the same quarter last year, and are a sign that improvements are being made, or at least that losses are being stemmed somewhat. After being bailed out by the Government on three occassions, AIG used the first quarter release to help assert that government bailouts would no longer be needed, and that they had $30 billion in an untapped credit line.

The news does seem to have generated faith in the company slightly, with the share price rising to $2.06 on Thursday from a close of $1.84 on Wednesday and to close on Friday at $2.01.

REFERENCES:

AIG First Quarter Results

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