American International Group, Inc. (AIG)

mdbuild (< 20) Submitted: 5/13/08 7:06 PM : Start Price: $37.98 AIG Score: 12.06

At present they are in year four of the declining property and casualty pricing cycle where premiums decrease while loss ratios increase and margins slide. All this at a time when capital is depleted due to first qtr losses and investment write offs. Prices and underwriting will firm within the last half of 2008. Their international presence allows them to invest capital in growing regions while domestic insurers are limited to the US. Under Greenspan they had a culture of treating distributors, employees, and customers harshly. However, new leadership is working to change that culture while working hard to build a more dedicated distribution network. Historically, size and strength permitted AIG to do things that other insurers could not do because they lacked the financial strength and/or expertise. The newly raised capital will allow them to solve the balance sheet problems and take advantage of the improving cycle where prices rise. Good time to buy at the bottom for new investors.

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