This is a 2% position in my farm account.
"As of September 2012, his biggest position was American International Group (NYSE: AIG). He held more than 86.5 million shares in the company, accounting for more than 40% of his total portfolio. AIG is considered to be the largest global insurer, operating in more than 130 countries, with more than 88 million customers worldwide. Several years ago the US government bailed out AIG with the rescue package of $182 billion. To date, that funding has been fully repaid and the US government realized a $22.7 billion profit. AIG has committed to focus on its core business. It has raised $6.45 billion by selling AIA, the Asian life insurer. It also sold out its 90% stake in an airplane leasing business for $5.28 billion.
AIG Should be Worth at Least its Book Value
Bruce Berkowitz mentioned that AIG was moving away from low frequency and high severity insurance, which, according to him, was “picking up pennies in front of a steamroller.” He thought that a business like AIG could trade at a multiple of the book value. However, it was trading at around 0.5x its book value. In the interview with WealthTrack, he said:
“I think the book value is near $70 per share. It‘s going to continue to grow. We believe the price, which is now less than $35 per share, will eventually reach book value. Maybe that happens in the $70s or the $80s, I don't know. But it gets about there. We‘ll see. And companies such as AIG can trade at a multiple of book value. But I don‘t want to go there yet. Just getting to our estimate of book value will be a very nice return for shareholders".
"Book value, a measure of assets minus liabilities, decreased to $66.38 a share as of Dec. 31 from $68.87 three months earlier. There was a $4.4 billion charge tied to discontinued operations, fueled by ILFC, AIG said."