In a report published Thursday, Credit Suisse analyst Thomas Gallagher downgraded the rating on American International Group Inc (NYSE: AIG) from Outperform to Neutral, and lowered the price target from $60.00 to $59.00.
In the report, Credit Suisse noted, “We are downgrading our rating of AIG to Neutral from Outperform. We continue to view AIG as the best positioned non-bank SIFI among the big 3 with regard to probability of returning the highest proportion of earnings both now and in the future as federal regulation unfolds. However, we also think AIG is currently very close to its maximum sustainable payout ratio-while both MET and PRU have room to go higher, especially if Federal capital rules for insurer don't prove to be overly punitive. If we take current capital return levels of each of the 3, we estimate that AIG is run rating at near 100% of GAAP earnings vs. MET at around 35%, and PRU around 45% - with the average bank going through CCAR getting approved for returns closer to 50% - MET and PRU are more likely to move higher while AIG more likely to be flat to down over the next several years vs. current capital return programs. We ascribe a higher P/E multiple to AIG vs. MET or PRU given the better cash flow visibility, but we believe both PRU and MET have better operating earnings visibility as we look out to 2016 vs. consensus expectations.”
American International Group closed on Wednesday at $54.48.
Latest Ratings for AIG
| Jan 2015 | Credit Suisse | Downgrades | Outperform | Neutral |
| Nov 2014 | Keefe Bruyette & Woods | Maintains | Market Perform | |
| Nov 2014 | Bank of America | Maintains | Buy |
View More Analyst Ratings for AIG
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