Today's story stock is American International Group, Inc. (NYSE: AIG). The company reported earnings last night after the bell and was in the news much of the day regarding their comments about the subprime mortgage market. AIG is one of the biggest U.S. mortgage lenders and it warned earlier today at a 
presentation that mortgage defaults are spreading. CEO Martin Sullivan said that AIG's tight underwriting standards had minimized losses and that the company was still poised to take advantage of future opportunities in the mortgage market.
In its presentation today AIG showed that mortgage delinquencies are becoming more common in the category just above subprime. He said that the defaults are certainly spreading through other others of the mortgage market at an increasing rate.
AIG posted a 16% year over year revenue jump and return on equity rose to 19.8% in the fiscal second quarter. The company displayed at its meeting today that the diversification of AIG is helping the company weather the current mortgage market. The company reiterated that it is holding steady regarding all of its investment in the mortgage area and that it feels no pressure to liquidate its holdings. AIG said that the holdings in the residential mortgage market account for only about 11.4% of AIG's total invested assets.
The good news that came from this story stock today is that AIG clearly has diversified itself in a way that it will make it out of this mortgage mess just fine. The bad news is that some other companies who are more leveraged to the residential mortgage market are in for even worse times ahead.
Comment Preview