1. American International Group Inc. (NYSE:AIG)
Forward P/E: 10.57
Earnings Growth: 16.60%
Number of Hedge Fund Holders: 61
American International Group Inc. (NYSE:AIG) is a global insurance company that ranks among the best insurance stocks to buy. Operating in about 190 countries and jurisdictions, AIG provides various insurance products, including liability, property, financial lines, and personal accident coverage. The company offers its products and solutions to both businesses and individuals.
The company has made significant strides in recent years to enhance its business and maximize shareholder value. In October 2020, American International Group Inc. (NYSE:AIG) announced its intention to separate its life and retirement business, which became Corebridge. Since then, Corebridge has entered into strategic partnerships with major firms like Blackstone and BlackRock. These partnerships have allowed the company to manage substantial assets and attract significant investments.
In 2023, American International Group Inc. (NYSE:AIG) executed 3 marketed deals and reduced its ownership in Corebridge to 52% by year-end. These strategic divestitures generated over $1.2 billion for Corebridge investors. In May 2024, the company announced its plan to sell approximately 20% stake in Corebridge to Nippon Life Insurance company.
Additionally, American International Group Inc. (NYSE:AIG) has streamlined its operations by selling its global individual personal travel insurance business during the second quarter of 2024. This simplifies the company’s portfolio allowing it to focus on core areas.
American International Group Inc. (NYSE:AIG) is actively transforming its high-net-worth business to better meet future demands. In July, AIG announced a strategic partnership with Ryan Specialty to become the exclusive wholesale broker for AIG’s Private Client Select Insurance Services (PCS). This collaboration aims to enhance service delivery in the high and ultra-high-net-worth markets by leveraging Ryan Specialty’s extensive broker network. AIG has invested over $100 million in infrastructure and digital capabilities for this segment, demonstrating its commitment to growth and innovation.
The company is focused on simplifying its operations and improving efficiency. American International Group Inc. (NYSE:AIG) has reduced its expense base by approximately $1.5 billion since 2018 while investing in technology and data management. As part of its ongoing efforts, American International Group Inc. (NYSE:AIG) launched the AIG Next program in early 2024 to streamline operations further. These strategic initiatives not only position AIG for long-term success but also enhance its competitive edge in the insurance market, making it an attractive investment opportunity.
AIG is undervalued at current levels. It is trading at 10.57 times its forward earnings. Analysts expect American International Group Inc. (NYSE:AIG) to experience 16.60% earnings growth this year.
According to Insider Monkey’s database, American International Group Inc. (NYSE:AIG) has gained interest from institutional investors, with the number of hedge fund holders increasing to 61 in Q2 2024, up from 54 in the previous quarter.
Overall, AIG ranks first among the 8 undervalued insurance stocks to invest in. While we acknowledge the potential of insurance companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AIG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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