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American International Group, Inc. , through its subsidiaries, engages in a range of insurance and insurance-related activities in the United States and internationally. The company operates in four segments: General Insurance, Life Insurance and Retirement Services, Financial Services, and Asset Management. It also provides insurance-related services, such as adjusting claims and marketing specialized products. American International Group was founded in 1967 and is based in New York City. The closest AIG competitors are Allianz AG and AXA. Even though AXA is a leader in revenues, AZ has greater gross margin and higher earnings before interest, taxes, depreciation and amortization.
AIG, however, has reached almost a double net income of AXA and AZ, which also makes it a leader in P/E. As we can see, AIG also demonstrates the best PEG (5 years expected) ratio, which means AIG price will be appreciating much more than its competitors. Fortune 500, in 2006 has ranked AIG as number 9 in its annual ranking of America's largest corporations. Allianz and AXA are not even in that list.
According to Wharton Business School of the University of Pennsylvania, investing into AIG can be almost as risky as investing into Enron has been. Both companies, at the first sight, are / were prosperous, showing very good results. A closer look, however, might reveal several not-so-pleasant details: last years scandal involving Maurice Greenberg, for example, when important documents simply vanished from AIG headquarters office. Yet another case involved $ 300 million in income AIG improperly claimed for selling outside investors covered calls on bonds in AIG's portfolio. Covered calls are supposed to give their owners the option to buy bonds at a set price for a given period, but AIG used other derivatives transactions to assure it could retain the bonds. Judging from the above information, it can be said that AIG bond is probably more risky than Allianz and AXA.
Despite its great net income results, PEG, P/E, P/S ratios, it is clear that theres much going on under the table in AIG. Bonds are long-term securities with a maturity of greater than one year, so AIG bonds should offer a higher discount rate, than its competitors do. Investing in AIG can be profitable for risk-taking investors, as potential profit after a bond matures can be higher than Allianz and Axa's.
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Research essay sample on Net Income P E
