Market Overview

6 Things AIG Could Do To Help Investors


American International Group Inc (NYSE: AIG) shares had a turbulent 2015, but finished the year up several dollars per share. Analysts at KBW think the stock will Outperform in the near-future and hold a price target of $72.00 on the stock -- 16 percent above current levels.

Why the bullishness? The answer, KBW said in a recent note, lies in a coming strategy shift. "We believe we're getting close to CEO Peter Hancock's announcement of AIG's strategy for improving its returns and valuation," analysts explained.

Six Themes To Watch

In their analysis, KBW experts wrote that there are six areas of potential improvement that the company -- and investors -- should watch. Here are some key quotes.

1. Ditch The Multiline Structure?

"We think AIG's scale actually works against it, but we're open to hearing a compelling strategic argument for AIG sustaining its multiline corporate structure."

2. Give Earnings Guidance

"We certainly understand AIG's hesitance to provide earnings guidance, but at this point, we don't think that management has the luxury of not providing its shareholders with this sort of information."

3. Give Detail On Capital Requirements

"We believe AIG needs to provide more detail about its businesses' individual and consolidated capital requirements so that investors can reasonably understand the various value creation options."

4. Clarify Poor P&C Performance

"We think AIG needs to clarify – to itself and to investors – which lines of business offer legitimate profitability prospects and which do of the biggest factors is that AIG has tried to fix too many lines of business, which is difficult enough in a positive rate environment and almost impossible to do successfully as rate decreases proliferate."

5. Adopt Conservative Reserving Process

"We think AIG's recent commercial P&C management changes offer a great opportunity for a $2-3 billion reserve charge that would regain investors' confidence in its balance sheet."

6. Explain Current Expense Reductions

"[M]anagement needs to clarify both the talent costs associated with its recent headcount reductions and the concrete and verifiable benefits of some of its other investment efforts."

Latest Ratings for AIG

Oct 2019Initiates Coverage OnIn-Line
Oct 2019MaintainsOverweight
Jul 2019UpgradesMarket PerformOutperform

View More Analyst Ratings for AIG
View the Latest Analyst Ratings

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