NEW YORK, NY -- (Marketwire) -- 12/12/12 -- Companies with insurance offerings, such as American International Group (NYSE: AIG) and MGIC Investment Corp. (NYSE: MTG), have been excelling of late, and look well positioned for growth as 2012 comes to a close. A number of companies have benefited from improving pricing trends, which bodes well moving forward, and higher yields on investments have also been a boon for some. Several companies have also been taking positive steps forward in regards to paying back loans and settling disputes, which could make for a solid 2013.
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The big news in the industry of late has been surrounding the U.S. Department of the Treasury and American International Group. The company announced that the Treasury has priced an offering of about 234.2 million shares of AIG at a price to market of $32.50 per share and after closing the transaction the Treasury will have sold all of its shares in the company. This is good news for AIG, as following the completion of the transaction it can close the chapter on its bailout. Share prices rose substantially following the news.
AIG has also been undergoing a lot of restructuring of late, as it attempts to focus on its core insurance operations. The company newly stated that it has entered into an agreement with an investor group, under which AIG will sell as much as a 90% interest in International Lease Finance Corporation. The deal is expected to close in the second quarter of next year, and will allow the company to better address its core business. The company has also been making moves abroad, specifically in China, as it looks to capitalize on the rapidly expanding market there. AIG has signed a non-binding agreement with the People's Insurance Company of China in order to sell life insurance in the populous nation.
MGIC has also been busy over the last little while. The company newly stated that it has come to an agreement with the Federal Home Loan Mortgage Corporation, better known as Freddie Mac, whereby it will pay over $267 million to put an insurance dispute regarding coverage on groups of loans to rest and maintain its status as an approved limited mortgage insurer with the Corporation. The company also recently released its November Operational Summary of its insurance subsidiaries' primary mortgage insurance. Primary New Insurance Written came in at $2.2 billion, and the company also managed to shrink the number of loans in its primary delinquent inventory from 146,282 at the beginning of the month to 143,153 at the conclusion.
One event that has had a negative impact on a number of companies in the industry, not to mention individuals and businesses, is hurricane Sandy. On top of the tragic loss of life, the hurricane also caused billions of dollars worth of damage, which some insurers are now obliged to cover. For example, AIG recently announced that its preliminary estimate for its after-tax losses related to the storm, net of reinsurance, will be around $1.3 billion. The company reported that Sandy related losses will be recorded in the 4th quarter. Interested investors may want to take a closer look at other company's 4th quarter financials once they are released, to see what kind of financial impact, if any, the storm has had.
While the industry has faced a number of obstacles, it is looking up as a whole. The recovering economy in the U.S. bodes well, and for those with an international presence, emerging markets also look strong. If the Eurozone is able to continue with its turnaround efforts in 2013, the industry could also receive a boost, though a great number of challenges still stand in the way.
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