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Is AIG 'worth more dead than alive?'

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American International Group Inc. may be “worth more dead than alive,” says Bernstein & Co. L.L.C. analyst Josh Stirling.

“We've long been bullish on AIG's potential,” Mr. Stirling said in a research note earlier this week, but there is a “lack of evidence the firm's current turnaround is making even tactical progress.”

Breaking up the firm may be the key to unlocking its value, he said.

“We believe the time has come for management to embrace the mantle of creative destruction, and seek to liquidate itself — in whole or in part — in order to simplify its operations, reduce its structural challenges and unlock its substantial conglomerate discount,” Mr. Stirling said in the research note.

“We think it evidently clear that today AIG is worth more dead than alive.”

“The optimum strategy we believe is selling the company off piece by piece to its competitors,” Mr. Stirling said in an interview.

AIG has faced mounting pressure from activist shareholder Carl Icahn to engage in a strategic review of insurer that could lead to a breakup or other action.

AIG likely could benefit from a strong acquisition environment, Mr. Stirling said.

“If the company sold itself off in a series of digestible and thus competitive transactions, strong competition among strategic bidders would ensure AIG benefits from the winning bidders' cost, capital and tax synergies, and likely lead to AIG selling its assets for a premium to book,” the Bernstein analyst said in the analysis.

AIG declined comment on the report, but a spokesman referred to the company's Nov. 23 statement in which it said it would “take additional actions to further accelerate its previously announced strategy” to improve performance and that it “maintains an active dialogue with shareholders.”