1. American International Group, Inc. (NYSE:AIG)
Diamond Hill Capital’s Stake Value: $1.02 billion
Number of Hedge Fund Holders: 48
American International Group, Inc. (NYSE:AIG) provides insurance products for commercial, institutional, and individual customers in North America and internationally. Keefe Bruyette upped the company’s price objective to $90 from $87, keeping an “Outperform” rating on the shares. The analyst believes that American International Group, Inc. (NYSE:AIG)’s continuing underwriting margin progress is expected to fuel outperformance over the upcoming 12 months. With a strong focus on disciplined capital management, sustained underwriting excellence, and expense management, the company remains on track to deliver 10% plus core operating return on equity for FY 2025.
American International Group, Inc. (NYSE:AIG) has strengthened its capital structure, improved its financial performance, and achieved a historic milestone with the deconsolidation of Corebridge Financial. The company closed 2024 with strong Q4 2024 results, generating strong growth throughout the businesses with outstanding underwriting profitability. Notably, for FY 2024, adjusted after-tax income per diluted share came in at $4.95, a 12% increase YoY, or 28% on a comparable basis. The underwriting income stood at ~$2 billion, marking another year of strong underwriting results. RBC Capital Markets also reiterated an “Outperform” rating on American International Group, Inc. (NYSE:AIG)’s stock with a price objective of $87, lauding its healthy share buyback strategy and promising position for 2025.
Aristotle Capital Management, LLC, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“Established in 1919 and headquartered in New York, American International Group, Inc. (NYSE:AIG) is one of the largest global insurance companies. AIG provides a comprehensive range of property and casualty (P&C) insurance to businesses and individuals in over 190 countries and jurisdictions around the world. The company also has a ~48% stake in Corebridge Financial (Corebridge), AIG’s old Life & Retirement segment.
AIG’s government bailout following the 2008 global financial crisis left the company on a 10+ year journey to transform its business (including five CEOs) by streamlining operations and attempting to improve its image with the public and investor community. Since taking over the General Insurance business in 2017 and assuming the role of CEO in 2021, Peter Zaffino has restructured underwriting and increased levels of reinsurance to reduce risk and control volatility, implemented a new structure for its High Net Worth business, divested non-core divisions such as crop risk and personal travel, and separated its Life & Retirement segment into the independently publicly traded company Corebridge. Following these actions, AIG will be a purely General Insurance focused business, with roughly 75% of its premiums tied to commercial and 25% to personal policies. We believe with Mr. Zaffino’s emphasis on risk-adjusted returns, AIG has become a stronger, more focused organization…” (Click here to read the full text)
While we acknowledge the potential of AIG as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued 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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