American International Group Inc.
) announced modifications in its bank credit facility in order to
boost the company's liability management initiatives.
Accordingly, AIG swapped its 4-year unsecured revolving credit
facility worth $4.0 billion, acquired in Oct 2012, with a new
5-year credit facility of $4.0 billion. AIG had about $3.9 billion
available at the end of Mar 2014.
Furthermore, the previous facility included letters of credit
with $2.0 billion of sublimit, of which $1.9 billion remained at
Mar 2014-end. However, the new arrangement comes with flexible
terms as the credit facility will now be available both as
revolving credit and as letters of credit. This increases the
sublimit of the letters of credit from the prior amount of $2.0
The new credit facility further improves the company's debt
profile by extending the maturity, while also boosting liquidity
and core operations. Over the last couple of years, AIG has been
raising funds from time to time through notes and stock offerings
to improve its maturity profile. The divestment of International
Lease Finance Corp. (ILFC) to
AerCap Holdings NV
) last month has further boosted the company's liquidity and
Moreover, AIG has strong capital adequacy and operating
leverage, along with a healthy financial leverage (debt-to-capital
ratio) that improved to 17.3% at 2013-end from 20.5% at 2012-end
and about 31% at 2010-end.These factors have supported effective
capital deployment, thereby buoying investors' confidence in the
stock as well.
AIG and AerCap have a Zacks Rank #3 (Hold). However, some
better-ranked insurers include
OneBeacon Insurance Group Ltd.
Old Republic International Corp.
), both of which sport a Zacks Rank #1 (Strong Buy).
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AMER INTL GRP (AIG): Free Stock Analysis Report
ONEBEACON INSUR (OB): Free Stock Analysis
OLD REP INTL (ORI): Free Stock Analysis Report
AERCAP HLDGS NV (AER): Free Stock Analysis
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