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AIG's Run of Bad News Could Be Over

For months, global ills have weighed down insurer American International Group (AIG). But is it set for a robust recovery? Some bulls swear by it. Among its woes: SARS's impact on Asian units, last year's $1.8 billion boost to reserves for claims, a tilt toward more life insurance -- usually a slow-growth business -- and murky plans for a successor to CEO Maurice "Hank" Greenberg, 75. These ills "may continue to depress AIG," says Catherine Seifert of Standard & Poor's, who rates it a hold.

Richard Steinberg of Steinberg Global Asset Management, however, isn't worried: SARS jitters provided a chance to buy at low prices, he says. "AIG is cheap given its superior, diverse businesses, its management, and the rebound in airline-leasing, variable-annuity, and mutual-fund operations," he argues. Trading at 80 in early 2002, AIG sank to 42 in mid-March of 2003 but has since bounced up to 59. Steinberg sees it at 75 in a year. He expects earnings to rise from 2002's $2.70 a share to $3.65 in 2003 (below consensus) and to $4.53 in 2004 (above consensus). John Leo, managing director at Northern Trust (NTRS) says AIG is a core holding in his portfolio.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. By Gene G. Marcial

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