Natural Disasters Strike AIG’s Stock Price
We have all watched the stock market’s rise and fall in the past year. Overall, the Dow Jones Industrial Index is reaching new milestones, while taking a big dip now and then. One of the nation’s biggest insurance providers has been on that roller coaster ride in the last few weeks.
American International Group (AIG) has seen its stock ebb and flow on the DOW, and in the midst of the swings, a major investor pulled out. AIG’s shares tumbled in early May after the insurance heavy-hitter posted disappointing earnings. In fact, earnings were down 30 percent in adjusted income.
What Happened?
According to industry insiders and AIG’s reports, the company took a huge hit from paying out for the California mudslides, the severe weather that hammered a great deal of the eastern part of the country, and other natural disasters. In all, these cost AIG $376 million. So what did this do to the stock price of AIG? Analysts were forecasting $1.26 a share in profit, but when adjusted for the payouts, the overall adjusted profit was $963 million, or $1.04 a share. That’s down from $1.36 in the first quarter a year ago.
So Who Bailed on AIG?
Investor Carl Icahn has a net worth of $18.8 billion. He is considered one of Wall Street’s most successful investors and has been shaking up corporate boardrooms for decades. He is not without his own rocky financial roads, however. His investment fund, Icahn Capital Management, has suffered three straight years of losses. After President Trump took office, Icahn advised him on regulatory overhaul but he left the position due to potential conflicts of interest.
Carl Icahn decided to sell his stake in AIG and it was publicly announced on Monday, May 7th. It’s significant because he held around a 4.8% stake in the company, which made him the third-largest shareholder in AIG. According to Forbes, Icahn sold his shares when the stock was between $60 and $65, which occured in early February.
Carl Icahn is well-known for his hostile takeovers of businesses. In 2015 he began purchasing shares of AIG and then called for the resignation of the company’s CEO, Peter Hancock. He demanded the insurer be split into three separate companies. That didn’t happen. Instead, the board approved a turnaround plan, and Icahn decided to sell his shares.
What Does This Mean to You?
Partners Direct Insurance works with a wide variety of insurance providers. It is important to us that your specific, unique needs are met with insurance, whether it is property, casualty, health, commercial insurance needs, or employee benefits. We can tailor an insurance plan that perfectly takes care of the things most important to you. Contact us so we can sit down with you and together work up a plan that has your best interests at heart.
