$22.00 +8.48 (62.72%) 52Wk Range: 6.60 - 583.50
AIG rose 63% today.
No, that isn’t a typo. Shares of American International Group, which is 80% owned by the U.S. government, surged two days before the beleagured insurer is scheduled earning’s release on Friday. It was the biggest gain since. The company is now worth — yes — $3 billion, one seventh of the value of its all-time high.
What’s behind the surge?
One likely reason was the financial results of a little-known Philadelphia mortgage insurer called Radian Group. The company blew away analysts profit expectation today and cut its claims payments outlook for the rest of the year. The company says mortgage losses are declining as the housing market recovers. While everyone from home builders to banks have been saying there are signs of a turnaround, Radian has some numbers to prove it. Radian’s loan - loss provisions fell 78% to $132.8 million. While first- and second-lien claims were $167.7 million, far below expectations of about $300 million.
That bodes well for AIG, which holds or insured hundreds of millions of dollars of mortgage-related securities and derivatives. Like Radian, AIG could surprise investors with fewer mortgage losses. It could also see big gains, as it marks to market its mortgage and other assets, amid tighter credit spreads, says S&P analyst Cathy A. Seifer.
http://blogs.wsj.com/deals/2009/08/05/why-is-aig-stock-up-63-today/#mod=msn_money_ticker
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