Back to top

Analyst Blog

American International Group, Inc. (AIG - Analyst Report) has announced the redemption of its entire outstanding balance of 7.7% Series A-5 junior subordinated debentures due 2047. The company has set Mar 18 as the redemption date, on which it will repay the principal amount along with any accrued and unpaid interest to debenture holders of record as of Mar 15.

AIG has outstanding 7.7% junior subordinated debentures worth $1.1 billion as of Mar 7, 2013. They are held in book-entry form through the Depositary Trust Corporation, which will redeem them according to its procedure. The debenture holders will receive the payment once the process is over and need not take any action to receive it as all the debentures are being redeemed.

The transaction is aimed at achieving AIG’s capital management targets. The redemption is expected to reduce the high-interest rate debt, thereby improving the interest coverage ratio. Reducing its interest expense by debt repayment is a priority for the company at present.

Thereafter, AIG might reinstate its dividend policy, which was suspended in 2008 due to the financial crisis faces by the company. However, the reinstatement depends on a Federal Review of its capital position. The company also intends to start repurchasing shares once its financial position becomes strong enough.

AIG is steadily trying to enhance its financial flexibility. Last month, the company announced its intention to repurchase bonds worth $1.25 billion from the open market, through a tender offer. AIG plans to redeem some of its junior subordinated debentures worth about $650 million and another set of bonds with principal amount totaling $275 million. One more set of sterling and Euros denominated debentures, valued at about $325 million, are also set for buyback.

AIG carries a Zacks Rank #3 (Hold). Other multi-line insurance companies worth considering are AEGON N.V. (AEG - Snapshot Report), Ageas SA/NV (AGESY) and CNO Financial Group Inc. (CNO - Analyst Report). All these companies carry a Zacks Rank #1 (Strong Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

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 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
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%