Despite Activists, AIG Core Seen As 'Weaker' By Analysts
Credit Suisse’s Thomas Gallagher maintained a Neutral rating for American International Group Inc (NYSE: AIG), while reducing the price target from $65 to $61.
The company reported its 4Q net operating loss at $1.10 per share, mainly on account of its previously announced $3.6 billion of development in the P&C business in the previous year as well as lower returns from alternatives.
“After making AIG’s normalizing adjustments highlighted in the financial supplement (i.e. cats, alternative returns, DIB/GCM, PICC investment returns, accounting refinements, WC discount rate change, IBNR claims, and PYD) the normalized EPS, as defined by the company, is $0.99 which compares to our core estimate of $1.16 for the 4th quarter,” analyst Thomas Gallagher wrote.
The quarterly earnings miss was mainly driven by the lower-than-expected performance of the property casualty business in both commercial and personal lines.
The EPS estimates for 2016, 2017 and 2018 have been reduced from $4.85 to $4.40, from $5.70 to $5.45 and from $6.67 to $6.42, respectively.
Gallagher mentioned that the reduction in price target reflects:
- The lower earnings estimates
- A lower multiple on the life insurance business reflective of peer valuations
- The “reduction of excess capital in our sum of the parts as we believe most of the excess capital will be deployed by YE 2017”
Latest Ratings for AIG
|Mar 2017||Deutsche Bank||Downgrades||Hold||Sell|
|Jan 2017||Credit Suisse||Upgrades||Neutral||Outperform|
|Dec 2016||BMO Capital||Upgrades||Market Perform||Outperform|
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