AIG - why did I not put my house on you?

I was shocked to see the price of the AIG shares (American Insurance Group) today rose from a low of 8.52 to a high of just over 55 this year, after a share split.


Chart forAmerican International Group, Inc. (AIG)
Looking deeper into the AIG story poses the question as to whether this is prolonged hype. 

Having a look at the P&L for the year 2008 and 2009 it is alarming to note that the company is still in an operating loss position of $12bn dollars. How was it possible to almost octoply your money on this result?

The answer? Assets ... lots of assets... and lots of rich cashed up investors in the pot. AIG enjoys a great net asset balance of 69Bn which leaves at least 5 years left in the coffers at this year's loss rate before it's wiped out.

The second thing is that AIG is an everyday business for people - as long as people hold policies and pay premiums the liabilities reduce each year that there is no disaster.

Maybe that multi-million dollar executive pay package and christmas party was worth it after all... the shareholders who bought into the dips would be celebrating!

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What's Up Jono ? www.whatsupjono.com Finance, Breaking News, Opinion, Trends, Charts.
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