New AIG 10K May Boost Its Stock: Analysts

By Daniel Hays

NU Online News Service, April 25, 1:59 p.m. EDT?There is a 75 percent chance that American International Group stock will rise after it releases its annual statement that was delayed while an internal investigation is underway, an analyst said today.[@@]

That estimate was made in a statement released by Jay Gelb, senior vice president at Lehman Brothers Equity Research.

The firm said its conclusions concerning the upcoming 10-K filing with the Securities and Exchange Commission are based on various scenarios in terms of whether the 10-K will be released on time, and how large the charge will be.

AIG announced March 30 that it would miss March 31 deadline for the 10-K filing. The carrier said it believed it would be able to file "on or prior to April 30" and that it might reduce book value by up to $1.8 billion.

The internal review was begun after an investigation by the New York Attorney General's Office and New York Department of Insurance over accounting irregularities by the company. The SEC is investigating as well.

Lehman Brothers said it put a 75 percent probability of a favorable outcome for AIG, which means the stock is likely to rally after 1) issuing the 10-K on or about April 30 with a charge of up to $5 billion, or 2) delaying the 10K filing but stating the charge will be in line with previous guidance of about $2 billion.

The analysts said their worst-case scenario, that it gave a 25 percent probability to, is AIG's shares could fall if it meaningfully delays the filing of the 10-K without a reasonable explanation, which it termed "unlikely."

The stock price will also fall if the charge is over $8 billion, or 10 percent of shareholder's equity, the firm added.

Because the date AIG put down for the filing falls on this Saturday, the analysts said they would understand if the company decided "to wait until Monday, May 2, before filing what we expect to be a highly complicated and detailed document." An SEC spokesman said the commission does not accept filings on weekings or after 5:30 p.m. Friday. As a general rule companies do not surprise investors with late Friday filings.

A spokesman for AIG, Chris Winans would say only that the company would "fulfill our obligation to disclose it ife we have a change in our plan as spelled out March 30.

Article updated 3:01 p.m.