In This Article:
American International Group, Inc. AIG benefits from rate increases, strategic divestitures, cost-curbing efforts, technological advancements and sound cash reserves.
AIG’s Zacks Rank & Price Performance
AIG currently carries a Zacks Rank #3 (Hold).
The stock has gained 5.7% in the past year.
Image Source: Zacks Investment Research
AIG’s Robust Growth Prospects
The Zacks Consensus Estimate for 2025 earnings is pegged at $6.50 per share, indicating 32.2% growth from the 2024 estimate. The estimate for revenues is $27.8 billion, which suggests a rise of 3.1% from the 2024 estimate.
AIG’s Decent Earnings Surprise History
AIG’s bottom line surpassed earnings estimates in three of the trailing four quarters and missed the mark once, the average surprise being 2.88%.
AIG’s Business Tailwinds
The company’s revenues benefit from rate increases, new business generation and strong retention rates across the Commercial and Personal lines of business. This, in turn, continues to drive the General Insurance segment.
The investment portfolio of AIG generates improved returns from alternative investments, equity and fixed maturity securities. AIG intends to utilize capital for pursuing possible buyouts in international markets with an aim to strengthen the company's personal business stream.
The company has been undertaking divestitures to focus on core insurance business and eliminate underperforming ones. The company has adopted a strategy focused on deleveraging its balance sheet and driving growth. Key milestones include the sale of a 20% stake to Nippon Life Insurance in May 2024 and AIG's global individual personal travel insurance business to Zurich Insurance Group in December 2024.
AIG has demonstrated progress in reducing expenses, driven by a shift in its business mix, stringent cost management and an improved premium base. These measures are expected to enhance operational efficiency and boost operating margins. To support its digital transformation, AIG selected Amazon Web Services as its preferred public cloud provider, enabling large-scale technological advancements.
AIG boasts a strong liquidity position backed by a solid cash balance and reducing debt level. This enables it to engage in prudent deployment of capital via share buybacks and dividend payments. Its leverage ratio has been improving, with total debt to total capital of 18.2% at the third-quarter end remaining below the industry’s average of 31.4%.
Key Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.