Earnings Preview For American International Group (AIG, GS, BAC)

American International Group AIG is expected to announce its Q1 earnings results on Thursday, May 5. Analysts are predicting AIG will report a loss of $0.15 per share, a dramatic change of course after posting earnings of $1.75 a year ago. In the last seven days, analysts have downgraded their earnings estimate by $0.06. American International Group is an international insurance organization, serving customers in more than 130 countries. AIG is also a provider of life insurance and retirement services in the United States. Looking ahead, AIG's earnings per share is expected to recover in the rest of the year. For the next quarter, AIG is expected to post earnings of $0.59 per share, still 58.7% lower than a year ago. In 2011, its earnings per share should reach $1.47, up 110.1% on the previous year's level. As for the revenues, this should be a year to forget. This quarter, AIG should post $14.97 billion, down 10.9% from a year ago, while in Q2 its revenues are projected to be 12.5% lower year-over-year to stand at $15.22 billion. For the whole year, revenues should reach $60.59 billion, a fall of 21.6% year-over-year. AIG has been hit hard when the financial crisis struck and is now looking to regroup. Investors will be watching closely at its plans to take legal actions against banks over fraud allegations connected to the recent financial meltdown. This is a move that could bring billions to AIG, but will also take it into direct conflict with Wall Street's giants – Goldman Sachs GS and Bank of America Corporation BAC, among others. Across the Atlantic Ocean, European Union is investigating if there was foul play in credit default swaps markets. Credit default swaps played a large role in near-collapse of AIG in 2008. European Union will mostly come up against the same players as AIG. It will probably be good news for AIG if the Europeans are able to find evidence of illegal activities by banks. Investors will be interested in the development of a legal framework intended to prevent another financial fallout. The U.S. Treasury recently proposed to exempt commonly used foreign exchange swaps and forwards from the most onerous new rules for the derivatives market, which was seen as a big win for Wall Street. Most of rating agencies have a Hold or Underperform rating on AIG. In yesterday's trading, AIG's shares added 0.91% to their value to close the day at $31.13.