Back to top

Analyst Blog

American International Group Inc. (AIG - Analyst Report) announced modifications in its bank credit facility in order to boost the company’s liability management initiatives.

Accordingly, AIG swapped its 4-year unsecured revolving credit facility worth $4.0 billion, acquired in Oct 2012, with a new 5-year credit facility of $4.0 billion. AIG had about $3.9 billion available at the end of Mar 2014.

Furthermore, the previous facility included letters of credit with $2.0 billion of sublimit, of which $1.9 billion remained at Mar 2014-end. However, the new arrangement comes with flexible terms as the credit facility will now be available both as revolving credit and as letters of credit. This increases the sublimit of the letters of credit from the prior amount of $2.0 billion.

The new credit facility further improves the company’s debt profile by extending the maturity, while also boosting liquidity and core operations. Over the last couple of years, AIG has been raising funds from time to time through notes and stock offerings to improve its maturity profile. The divestment of International Lease Finance Corp. (ILFC) to AerCap Holdings NV (AER - Snapshot Report) last month has further boosted the company’s liquidity and capital flexibility.

Moreover, AIG has strong capital adequacy and operating leverage, along with a healthy financial leverage (debt-to-capital ratio) that improved to 17.3% at 2013-end from 20.5% at 2012-end and about 31% at 2010-end.These factors have supported effective capital deployment, thereby buoying investors’ confidence in the stock as well.

AIG and AerCap have a Zacks Rank #3 (Hold). However, some better-ranked insurers include OneBeacon Insurance Group Ltd. (OB - Snapshot Report) and Old Republic International Corp. (ORI - Snapshot Report), both of which sport a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
QIHOO 360 T… QIHU 95.04 +4.95%
PILGRIM'S P… PPC 31.52 +3.72%
CLAYTON WIL… CWEI 138.97 +3.55%
FLAMEL TECH… FLML 14.02 +3.16%
CALLON PETE… CPE 11.50 +3.14%