Credit Suisse Believes Benefit From Carl Icahn Already Priced Into Shares Of AIG

• Shares of American International Group Inc AIG have appreciated 14.48 percent year to date, trading close to their 52 week high on December 1.
• Thomas Gallagher of Credit Suisse has maintained a Neutral rating on the company, with a price target of $65.
• Gallaghar believes that the benefit to American International form Carl Icahn investing in the company are mostly priced into the stock.

Analyst Thomas Gallaghar explained that following Mr. Icahn’s consent solicitation “and AIG's swift response that it would have a strategic update ahead of 4Q 15 results, we think most investors view this situation as a 'win-win' for the AIG stock.”

Gallaghar believes that the company’s “elevated sense of urgency” is a positive and includes the possibility that American International is considering the divesture of some of its modular businesses, while increasing expense control and continuing with aggressive capital management.

However, Gallaghar believes that all these positive are also already largely factored into the stock, which could have been trading 5-10 percent lower in the absence of the boost from the presence of Mr. Icahn.

“We believe that many investors anticipate that these factors should result in more meaningful upside for the shares, extrapolating recent high M&A multiples paid by Japanese buyers for certain US insurers,” Gallaghar added.

Although the company’s segment reporting does not offer transparency regarding either earnings or the capital involved in the various businesses, Credit Suisse’ review of the US and Japanese regulatory filings suggest that although still in the positive, the overall EPS accretion would be 5 percent or less.