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 American International Group Inc. (NYSE:AIG) will announce first-quarter results on Thursday. Losses this quarter are expected to be significantly lower than the record $61.7 billion net loss the insurer had in the fourth quarter, meaning it might not need another bailout, according to Reuters.AIG's stock closed Tuesday up 16% on this news. Does that mean the worst is over for the insurer? Maybe, but maybe not. "The fact they don't appear to need more money is important because it may be a bottoming out of their problems," Phillip Phan, professor of management at the Johns Hopkins Carey Business School in Baltimore, told Bloomberg. Still everyone expects a loss, of course. But what does "significantly lower" actually mean? Billions of dollars less in losses? Analysts estimate that the insurer will report a loss of 6 cents a share on revenue of $26.17 billion, according to iStockanalyst. It would also be the insurers sixth consecutive quarterly loss:
AIG's fourth-quarter loss was the largest quarterly loss in U.S. corporate history, so it is unlikely the first quarter will be as bad. In fact, Seeking Alpha argues that there is an 81% chance that AIG will beat first-quarter estimates. But there is also the question of how the bailouts factor into the earnings reports and if AIG will break down its earnings reports by asset, as it spins more and more off. There is also something vaguely familiar about how the apparent earnings results were "leaked." Now AIG CEO Edward Liddy isn't being as cavalier about his firm's performance as, say, Citigroup Inc. (NYSE:C) CEO Vikram Pandit and Bank of America Corp. (NYSE:BAC) CEO Ken Lewis. Ahead of first-quarter results, they said the worst was over for their institutions and assured the market that their banks were profitable, but they are now facing credibility issues as the government's stress tests indicate the banks need to raise more capital. On the subject, MarketWatch states: "Liddy has given shareholders a nice boost by suggesting the bleeding has stopped. This was the tack that produced the rally that began in early March. Vikram Pandit of Citigroup Inc. and Ken Lewis at Bank of America Corp. both suggested their respective banks were profitable during the first two months of the year, and the market hasn't paused to look back. Insurance is a good business, but even in its most profitable years, AIG never posted much more than $10 billion in profits. At that rate, it will take at least until 2025 to make taxpayers whole, unless it hires Bernie Madoff as chief financial officer." But all in all, it looks like the first-quarter results will be better, which is a good thing for Liddy, who is expected to follow up the earnings announcement with a May 13 visit to the House Committee on Oversight and Government Reform to testify on the restructuring of the insurer. - Maria Woehr AIG's Liddy to testify on taxpayers investment AIG actually awarded much more in bonuses
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I am happ to see the loss was not as significant as some investor may have thought. As a major shareholder in the company I am confident they will survive, perhaps not in the 70's but certainly in the 30's in time to come.