A report today in The Wall Street Journal [subscription required] indicates that the restructuring of American International Group, Inc. (NYSE: AIG) could be a multi-year process.
The paper cites an internal email sent to AIG employees on April 23, which describes an initiative known as "Project Destiny." The dreamily named plan involves a 45-day review of the insurance issue's various units, which is then meant to generate a longer-term road map for the future.
While the internal memo explains Project Destiny as an "effort to redefine the future of most of the major businesses within AIG," Chief Restructuring Officer Paula Reynolds described the initiative in terms indicating that all AIG needs to regain its joie de vivre is a torrid island affair with a younger man. "Simply put, we are going to get our groove back," she enthused.
In any event, look for Project Destiny to be on the agenda when AIG's future is discussed this Wednesday at a congressional hearing. The Journal reports that Rep. Edolphus Towns (D - NY), chairman of the House Committee on Oversight and Government Reform, requested copies of the Project Destiny teams' business plans in preparation for the hearing.
AIG shares fell nearly 7% out of the gate this morning, as investors learned that the company's road to recovery will likely be long and grueling. The stock has added a respectable 28% year-to-date, trending higher along support from its 10-day and 20-day moving averages -- but AIG has struggled to find a foothold above $2 per share.
In the coming days, this level could continue to stifle the security's progress on the charts. The May 2 strike is home to peak call open interest of 59,295 contracts. With May-dated options set to expire at the close of trading on Friday, this hefty accumulation of overhead calls could exert pressure on AIG as the hedges related to this open interest are gradually unwound.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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