I believe the low stock price is good for AIG in the long-run. Share buybacks at 30% below book value will do a world of good in couple of years when the ROE improves.
Though it is hard to predict the PPS, I feel that the AERCAP deal closure in the second quarter will act as a big catalyst. CEO also hinted at going offense, they might start underwriting more risky policies as the capital situation has improved. When the risk-off happens, AIG's earnings will grow a lot.
Analysts are wrong in the interpretation of P&C combined ratio, which helps in the short-term as we can do buy-backs below the book value - this goes a long way in improving EPS.
If we exclude Prior year development net of premium adjustments from the P&C adjusted combined ratio 102.-3.1, P&C has been profitable with a adjusted combined ratio of 99.1. If we don't get any major insurance loss like Sandy, combined with the increase in premiums (which generally happen after a storm), 2014 will be a fantastic year for P&C.
In fact, AIG has healthy premium growth in P&C which augurs well for the future. AIG lost around $189mn in aircraft leasing business (1,117 - 1,306). The AERCAP deal is a double whammy or probably a triple whammy for the following reasons:
1. They will not lose money anymore on aircraft leasing business.
2. They will have recurring income from AERCAP as they are able to turn the business to profit from a loss.
3. The sale frees up liability of around $20 billion, which can be used to underwrite new policies. I assume an additional $200mn can be earned as a result of this alone.
Bottom line, AIG need not do any magic for the turnaround - doing the business as usual itself should have telling effects.