4. Flying high
The road toward the sale of AIG’s aircraft leasing operations, International Lease Finance Corp, has been a bumpy one for the insurer. The latest news is that AIG and its prospective buyers have once again bumped out the closing date in order for the buyers to raise funds for the purchase. Though a series of previously set deadlines has already come and gone, the Chinese consortium now has until the end of September to find the cash for the $4.75 billion price tag.
In the meantime, AIG and its ILFC management team have been making the moves necessary to keep the operations up to snuff, including the recent purchase of 50 new jets. Though it may seem like the perfect time for management to take a break and avoid any big expenditures, the company is choosing to take another path — one that will keep the operations in high demand if the current sale falls through.
Should the deal finally die, AIG has a few options: Shop around for a new buyer, or go IPO. Either one would be reasonable, with conditions better now than when the Chinese deal began, possibly setting AIG up for a better sale price, or spinning off the operations and taking them public. Since ILFC is the second largest aircraft leasing firm in the world, there’s sure to be plenty of interest if AIG chose the latter option.
5. Pay up
Back to the dividends. As was mentioned in the first point, there was plenty of speculation as to when AIG would reinstate its dividend — and how much it would be. Since announcing its $0.10 per share dividend and a $1 billion share repurchase plan, investors seem to be satisfied. But with a ton of cash on hand, couldn’t the company have shelled out a bit more for investors that have held tough with it? It all comes down to the main point of management’s focus: doing what’s best for the long term. Let’s take a look at AIG’s dividend versus a competitor, The Allstate Corporation (NYSE:ALL).
The Allstate Corporation (NYSE:ALL) announced a $0.25 per share dividend when it reported second-quarter earnings:
| Metric | AIG | Allstate |
| Quarterly Dividend | $0.10 | $0.25 |
| Dividend Yield | 0.8% | 2% |
| Available Cash | $46.52B | $3.29B |
| Cash Per Share | $31.51 | $7.10 |
| Earnings Per Share | $1.86 | $4.68 |
| Earnings Growth (YOY) | 17.1% | 2.60% |
Source: Yahoo! Finance.
Though AIG does have a tremendous advantage over Allstate in terms of cash on hand, it’s clear that the rival’s dividends are supported by more robust EPS. Since AIG’s management has been focused on restructuring and making new investments, it’s not a surprise that they would choose to keep the cash in case new opportunities arise that can help keep their earnings growth on a positive trend.
Summing it up
The main trend that can be seen in all of the great decisions AIG’s managment has made so far in 2013 is simple: Choose the option that provides the highest value for the company’s long-term goals and prospects. And since the year isn’t over yet, it will be exciting to see where the team takes AIG from here.
The article 5 Great Things AIG’s Done So Far in 2013 originally appeared on Fool.com and is written by Jessica Alling.
Fool contributor Jessica Alling has no position in any stocks mentioned. The Motley Fool recommends American International Group. The Motley Fool owns shares of American International Group and has the following options: long January 2014 $25 calls on American International Group.
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