American International Group, Inc. (AIG) | Investment Case

1. Company Snapshot

1.a. Company Description

American International Group, Inc.offers insurance products for commercial, institutional, and individual customers in North America and internationally.The company's General Insurance segment provides general liability, environmental, commercial automobile liability, workers' compensation, casualty, and crisis management insurance products; commercial, industrial, and energy-related property insurance; and aerospace, political risk, trade credit, portfolio solutions, crop, and marine insurance.

It also provides professional liability insurance products for a range of businesses and risks, including directors and officers, mergers and acquisitions, fidelity, employment practices, fiduciary liability, cyber risk, kidnap and ransom, and errors and omissions insurance.In addition, this segment offers personal auto and property insurance, such as auto, homeowners, umbrella, yacht, fine art, and collections; voluntary and sponsor-paid personal accident; supplemental health products; extended warranty insurance products; and travel insurance products.Its Life and Retirement segment offers variable annuities, index and fixed annuities, and retail mutual funds; and financial planning and advisory services; record-keeping, plan administrative, and compliance services; and term life and universal life insurance.

It also provides stable value wrap products, and structured settlement and pension risk transfer annuities; and corporate- and bank-owned life insurance and guaranteed investment contracts.This segment sells its products through independent marketing organizations, independent insurance agents, financial advisors, direct marketing, banks, and broker-dealers.The company was founded in 1919 and is headquartered in New York, New York.

Show Full description

1.b. Last Insights on AIG

American International Group's (AIG) recent performance faced challenges due to catastrophe losses and higher expenses. Despite a 13% year-over-year increase in net income, the company's Q3 EPS of $0.93 missed estimates. The insurer's results were also impacted by pressure on underwriting gains. However, AIG's strategic transactions, including investments in Convex Group, position the company for future growth. S&P Global upgraded AIG's subsidiaries last spring, citing its de-leveraging strategy. AIG's commercial underwriting and rising international premiums drove a 77% surge in Q3 earnings.

1.c. Company Highlights

Last Price	77.03
Change Percentage	-0.32%
Open	76.76
Previous Close	77.28
Market Cap ( Millions)	41564
Volume	4184446
Year High	88.07
Year Low	69.24
M A 50	78.42
M A 200	80.9

FCF Yield	6.74%
Dividend Yield	2.21%
ROE	2.17%
Debt / Equity	22.12%
Net Debt / EBIDTA	98.48%
Price To Book	1.07
Price Earnings Ratio	48.95
Price To FCF	14.83
Price To sales	5.84
EV / EBITDA	6.44

2. AIG Delivers Strong Q3 Results with EPS Surge and Strategic Investments

AIG reported a significant increase in adjusted after-tax income per diluted share to $2.20, beating estimates of $1.72, driven primarily by its General Insurance business. The company's underwriting income rose 81% year-over-year to $793 million, while net investment income on an adjusted pretax basis increased 15% to $1 billion. The General Insurance segment saw gross premiums written of $8.7 billion, a 1% increase from the prior year, with an accident year combined ratio as adjusted of 88.3%, unchanged from the prior year quarter.

Publication Date: Nov -06

                                    📋 Highlights
                                    EPS Surge:
                                                Adjusted after-tax income per diluted share reached $2.20, up 77% YoY, driven by General Insurance.
ROE Growth:
                                                Core operating ROE hit 13.6% in Q3, a 430 bps increase YoY, with full-year ROE at 10.9%.
Underwriting Profit:
                                                Underwriting income soared to $793M, up 81% YoY, with net investment income rising 15% to $1B pre-tax.
Capital Returns:
                                                Share repurchases and dividends totaled $1.5B in Q3, with $5.3B returned to shareholders YTD.
Expense Efficiency:
                                                General Insurance expense ratio improved 100 bps to 30.9%, on track to hit <30% by 2027.

                                

Segment Performance

The North America Commercial Insurance segment reported flat net premiums written year-over-year, while the International Commercial Insurance segment saw a 1% increase, driven by growth in Marine and Property lines. AIG's General Insurance expense ratio improved 100 basis points year-over-year to 30.9%, moving closer to its target of below 30% by 2027, as highlighted by Peter Zaffino's statement that the company is focused on achieving this target and will accelerate efforts to do so.

Strategic Investments and Capital Management

AIG continued to make strategic investments, including a 35% equity interest in Convex Group and a 9.9% stake in Onex Corporation, expected to be earnings, EPS, and ROE accretive in the first year post-closing. The company also acquired the renewal rights for Everest's core retail commercial property and casualty portfolios, representing approximately $2 billion of gross premiums written. AIG maintained its disciplined capital management strategy, returning $1.5 billion to shareholders through share repurchases and common stock dividends in Q3.

Valuation and Outlook

With a Price-to-Book Ratio of 1.06, AIG's valuation appears reasonable. Analysts estimate revenue growth of 4.0% for next year. Given the company's strong Q3 performance, strategic investments, and commitment to capital management, it is well-positioned for future growth. The current dividend yield of 2.23% adds to the attractiveness of the stock. As AIG continues to execute on its strategy, investors will be watching for further progress on its expense ratio target and the integration of its recent investments.

3. NewsRoom

Touchstone Value Fund Q3 2025 Portfolio Update

Dec -03

Source: seekingalpha.com

Financial Contrast: American International Group (NYSE:AIG) versus Fidelity National Financial (NYSE:FNF)

Dec -01

Source: defenseworld.net

American Century Companies Inc. Raises Stake in American International Group, Inc. $AIG

Nov -26

Source: defenseworld.net

17 Capital Partners LLC Decreases Stock Holdings in American International Group, Inc. $AIG

Nov -20

Source: defenseworld.net

Jeff Auxier's Strategic Moves: Fiserv Inc. Takes Center Stage with 0.24% Portfolio Impact

Nov -19

Source: gurufocus.com

Insurance giant AIG pulls plug on incoming exec hire over alleged affair with subordinate: report

Nov -19

Source: nypost.com

AIG Withdrew Executive Hire After Inquiry Into Alleged Inappropriate Workplace Relationship

Nov -19

Source: wsj.com

Aspen Investment Management Inc Boosts Stock Position in American International Group, Inc. $AIG

Nov -19

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.66%)

6. Segments

General Insurance - North America

Expected Growth: 4.3%

American International Group’s General Insurance - North America operations will benefit from a strong brand presence, increasing demand for commercial insurance, and expansion into emerging markets.

General Insurance - International

Expected Growth: 4.5%

AIG’s international general insurance operations are expected to grow driven by increasing demand for insurance products, expansion into emerging economies, and a focus on digitalization and innovation.

General Insurance - Global Personal

Expected Growth: 4.5%

Increasing demand for personal insurance products, driven by growing consumer awareness and rising disposable incomes, will fuel growth in AIG's global personal general insurance segment.

General Insurance - Net Investment Income

Expected Growth: 5.5%

AIG's General Insurance net investment income is driven by a strong investment portfolio and a disciplined underwriting approach, resulting in stable returns and growth. The segment is expected to benefit from a favorable interest rate environment and a diversified investment portfolio.

Unallocated Changes In The Fair Values of Equity Securities and Aig's Investment In Corebridge

Expected Growth: 5.2%

AIG's unallocated equity securities and Corebridge investment changes are expected to drive growth, fueled by improving market conditions, increased investment yields, and effective capital management strategies.

Unallocated Net Investment Income on Fortitude Re Funds Withheld Assets

Expected Growth: 5.5%

AIG's income from withheld assets of Fortitude Re funds, driven by strategic partnerships, effective risk management, and a strong capital position, is expected to drive growth. The company's efforts to simplify its operating structure and focus on core businesses will also contribute to growth.

Unallocated Net Realized Losses on Fortitude Re Funds Withheld Assets

Expected Growth: 4.5%

American International Group's unallocated losses on withheld assets are expected to decline, driven by the company's efforts to improve underwriting discipline, enhance risk selection, and strengthen reserves.

Unallocated Net Realized Gains on Fortitude Re Funds Withheld Embedded Derivative

Expected Growth: 5.3%

AIG's unrealized gains on withheld embedded derivative funds are driven by increasing investment returns, improved risk management, and a gradual shift towards higher-margin businesses, such as life insurance and retirement services.

Other Operations

Expected Growth: 10.3%

American International Group’s other operations, including asset management and financial services, are poised to grow driven by increasing demand for asset management, diversification strategies, and expanding presence in emerging markets.

7. Detailed Products

General Insurance

AIG's general insurance products provide coverage for individuals and businesses against various risks such as accidents, natural disasters, and liability.

Life Insurance

AIG's life insurance products provide financial protection to individuals and families in the event of death or terminal illness.

Retirement and Savings

AIG's retirement and savings products help individuals plan and save for their retirement goals.

Mortgage Insurance

AIG's mortgage insurance products provide protection to lenders and borrowers against default risks.

Reinsurance

AIG's reinsurance products provide risk management solutions to insurance companies.

Specialty Insurance

AIG's specialty insurance products provide coverage for unique risks such as aviation, energy, and marine.

Employee Benefits

AIG's employee benefits products provide insurance coverage to employees of corporate clients.

8. American International Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for American International Group, Inc. is medium due to the presence of alternative insurance providers and financial institutions that offer similar products and services.

Bargaining Power Of Customers

The bargaining power of customers for American International Group, Inc. is low due to the company's strong brand reputation and diversified product offerings, which reduce the customers' ability to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers for American International Group, Inc. is medium due to the company's dependence on a few large reinsurers and the availability of alternative suppliers.

Threat Of New Entrants

The threat of new entrants for American International Group, Inc. is low due to the high barriers to entry in the insurance industry, including regulatory hurdles and capital requirements.

Intensity Of Rivalry

The intensity of rivalry for American International Group, Inc. is high due to the competitive nature of the insurance industry, with many established players competing for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	33.05%
Debt Cost	5.05%
Equity Weight	66.95%
Equity Cost	9.08%
WACC	7.75%
Leverage	49.36%

11. Quality Control: American International Group, Inc. passed 6 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

PNC Financial Services Group

A-Score: 6.9/10

Value: 5.8

Growth: 6.0

Quality: 6.6

Yield: 8.0

Momentum: 6.0

Volatility: 9.0

1-Year Total Return ->

Hartford Financial Services

A-Score: 6.9/10

Value: 6.3

Growth: 7.3

Quality: 6.4

Yield: 4.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

M&T Bank

A-Score: 6.6/10

Value: 6.6

Growth: 5.6

Quality: 6.8

Yield: 6.0

Momentum: 6.0

Volatility: 8.7

1-Year Total Return ->

Truist

A-Score: 5.8/10

Value: 4.8

Growth: 2.8

Quality: 5.5

Yield: 8.0

Momentum: 6.0

Volatility: 8.0

1-Year Total Return ->

AIG

A-Score: 5.8/10

Value: 6.1

Growth: 2.6

Quality: 6.9

Yield: 4.0

Momentum: 6.0

Volatility: 9.0

1-Year Total Return ->

Prudential Financial

A-Score: 5.5/10

Value: 5.7

Growth: 3.4

Quality: 4.9

Yield: 8.0

Momentum: 2.0

Volatility: 9.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-0.29%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.75%

American International Group, Inc. - US0268747849

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on AIG

1.c. Company Highlights

Average Growth

Stable Momentum

Medium Volatility

Earnings Beats

Revenues Miss

Less Volatile

Earnings Miss

Fairly Valued

Higher Growth

Weak Momentum

Revenues Beats

Average Quality

Lower Growth

Average Yield

2. AIG Delivers Strong Q3 Results with EPS Surge and Strategic Investments

Segment Performance

Strategic Investments and Capital Management

Valuation and Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.66%)

6. Segments

General Insurance - North America

Expected Growth: 4.3%

General Insurance - International

Expected Growth: 4.5%

General Insurance - Global Personal

Expected Growth: 4.5%

General Insurance - Net Investment Income

Expected Growth: 5.5%

Unallocated Changes In The Fair Values of Equity Securities and Aig's Investment In Corebridge

Expected Growth: 5.2%

Unallocated Net Investment Income on Fortitude Re Funds Withheld Assets

Expected Growth: 5.5%

Unallocated Net Realized Losses on Fortitude Re Funds Withheld Assets

Expected Growth: 4.5%

Unallocated Net Realized Gains on Fortitude Re Funds Withheld Embedded Derivative

Expected Growth: 5.3%

Other Operations

Expected Growth: 10.3%

7. Detailed Products

General Insurance

Life Insurance

Retirement and Savings

Mortgage Insurance

Reinsurance

Specialty Insurance

Employee Benefits

8. American International Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: American International Group, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

12.e Scoring ^Insights

12.f DCF ^BETA