After aging-out insurer American International Group Inc. shares jumped 6.7% yesterday, an analyst at UBS wishes to remind investors that the increase in prices of the shares of AIG helps fuel-wait for it - the increase in shares of AIG.
This is because nongovernmental shareholders who possess stock when the United States converts his favourite AIG common stock will get 75 million warrants giving right to buy more stock to a share of $45 more than 10 years. These warrants were out of the money when the agreement was announced at the end of September. But shares increased by 37% since and was at $51.35 in trading on Wednesday afternoon.
UBS analyst Andrew Kligerman, says an increase of $1 in stock of AIG raises the value of the subscription by 40 c share. Mandates are now valued at $12 to $ 13 each, said Kligerman. UBS had already appreciated mandates to about $8 to $ 9 by hand when the inventory was approximately $42 mid-October.
Another factor that?s, reinforce the actions of Geneva International Airport, according to UBS, was an increase in the price of the insurer's rival that MetLife Inc. AIG obtained the issue when it completed the sale of a life insurer Asia called MetLife Alico November 1. MetLife shares increased by 8.5% since then, which means AIG?s game is worth nearly $ 10 billion.
Geneva International Airport will use these shares of MetLife to help repay its bailout under a plan finalized this month.
Of course, the logic works also in the opposite direction: MetLife share decreased pinches AIG and the AIG shares decreased decreases the value of the subscription.
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