7) American International Group, Inc. (NYSE:AIG)
Forward P/E as of August 22: 12.33x
Number of Hedge Fund Holders: 61
Expected EPS Growth this Year: 21.6%
American International Group, Inc. (NYSE:AIG) is one of the largest insurance and financial services firms with a global footprint. The company operates through various subsidiaries that provide property, casualty, and life insurance.
The company’s homeowners insurance seeks to benefit from scale and allows it to provide features like high deductibles which can reach as much as $10,000. American International Group, Inc. (NYSE:AIG) has reported a strong 2Q 2024, announcing a 38% YoY increase in adjusted after-tax income, reaching $775 million. The company has been focusing on achieving a 10% plus return on equity (ROE) target via underwriting discipline, expense management, and capital optimization.
The company has made more progress by selling its stake in life insurer Corebridge recently while repositioning the portfolio through several divestitures. Therefore, this turnaround in the business is expected to support American International Group, Inc. (NYSE:AIG) moving forward.
The company’s earnings growth is expected to be driven by its focus on underwriting excellence and continued expense discipline. The repositioning of the underwriting portfolio enabled it to deliver high-quality growth in both admitted and non-admitted markets with several points of entry to deploy capital towards the most attractive risk-adjusted returns.
Analysts at BMO Capital Markets increased their price target on the shares of American International Group, Inc. (NYSE:AIG) from $88.00 to $89.00. They gave the company an “Outperform” rating on 13th May. Additionally, a total of 61 hedge funds held stakes in American International Group, Inc. (NYSE:AIG) as of the end of the second quarter, according to the Insider Monkey database.
ClearBridge Investments, an investment management company, released first quarter 2024 investor letter. Here is what the fund said:
“One example of our internal return engine is our continued large position in American International Group, Inc. (NYSE:AIG), which we have owned for roughly 10 years. We originally bought AIG at a greater than 30% discount to our initial estimate of business value. This entry point assumed minimal improvements in the business but allowed us to absorb some inevitable downdrafts along the way that we took advantage of to build our position. The key, however, is that during this period AIG management dramatically improved their business. The company has compounded intrinsic business value per share at a double-digit rate by reducing risks as management overhauled their underwriting process, strengthened their balance sheet, cut expenses and operational complexity and structurally improved returns on equity. A major source of added lift came from intelligent capital allocation: shares outstanding have been more than cut in half during this period, as management bought back roughly 5% of the company annually below intrinsic business value.
However, this valuation-driven return engine can only create so much lift on its own. We are always looking for big opportunities to create external lift in our returns from dramatic shifts in markets. The first comes from exploiting market extremes, where the long-term probabilities are very much in our favor, while the second comes from investor underreactions to big shifts in pricing power that can be exploited through our valuation-driven lens.”
