We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
AIG Declines 43% in a Year: What's Affecting the Stock?
Read MoreHide Full Article
American International Group, Inc.’s (AIG - Free Report) shares have lost 43% in a year compared with the industry’s decline of 16%. Notably, the Zacks S&P 500 composite has rallied 15% in same time frame.
The multiline insurer continues to grapple with lower revenues, weak underwriting results and increased debt levels. It delivered a trailing four-quarter negative earnings surprise of 32.67%, on average.
AIG’s trailing 12-month return on equity (ROE) of 3.3% is lower than the industry’s ROE of 8.3%. This highlights the company’s inability to utilize its shareholders’ funds.
Factors Affecting AIG
The company’s property and casualty (P&C) business has been exposed significantly to severe catastrophe and weather-related losses. This has induced volatility to its underwriting results and also acted as a drag on the company’s bottom-line growth. Notably, catastrophe losses of $674 million soared 287.4% year over year in the second quarter, which includes $458 million of estimated COVID-19 losses.
Moreover, net investment income of this multiline insurer, which carries a Zacks Rank #4 (Sell), has been impacted by the prevailing lower interest rates on account of the pandemic.
Disruption caused by the pandemic in the business and economic environment has kept the company’s revenues under pressure for the past two quarters.
Furthermore, the company’s increased debt levels remain concerns. It does not have sufficient cash reserves to service debt obligations. Notably as of Jun 30, 2020, the company’s long-term debt increased 14.8% from 2019 end level with total debt to total capital of 38.5% deteriorating 410 basis points (bps) from 2019 end.
Notably, the Zacks Consensus Estimate for 2020 earnings per share is pegged at $2.60, indicating a decline of 43.4% from the prior year.
We believe these potential headwinds are likely to weigh on the company’s performance in the days ahead.
Stocks to Consider
Some better-ranked stocks in the insurance space include Fidelity National Financial, Inc. (FNF - Free Report) , First American Financial Corporation (FAF - Free Report) and Assurant, Inc. (AIZ - Free Report) . While Fidelity National sports a Zacks Rank #1 (Strong Buy), First American and Assurant carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fidelity National, First American and Assurant have a trailing four-quarter earnings surprise of 32.13%, 20.84% and 6.00%, respectively.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Image: Bigstock
AIG Declines 43% in a Year: What's Affecting the Stock?
American International Group, Inc.’s (AIG - Free Report) shares have lost 43% in a year compared with the industry’s decline of 16%. Notably, the Zacks S&P 500 composite has rallied 15% in same time frame.
The multiline insurer continues to grapple with lower revenues, weak underwriting results and increased debt levels. It delivered a trailing four-quarter negative earnings surprise of 32.67%, on average.
AIG’s trailing 12-month return on equity (ROE) of 3.3% is lower than the industry’s ROE of 8.3%. This highlights the company’s inability to utilize its shareholders’ funds.
Factors Affecting AIG
The company’s property and casualty (P&C) business has been exposed significantly to severe catastrophe and weather-related losses. This has induced volatility to its underwriting results and also acted as a drag on the company’s bottom-line growth. Notably, catastrophe losses of $674 million soared 287.4% year over year in the second quarter, which includes $458 million of estimated COVID-19 losses.
Moreover, net investment income of this multiline insurer, which carries a Zacks Rank #4 (Sell), has been impacted by the prevailing lower interest rates on account of the pandemic.
Disruption caused by the pandemic in the business and economic environment has kept the company’s revenues under pressure for the past two quarters.
Furthermore, the company’s increased debt levels remain concerns. It does not have sufficient cash reserves to service debt obligations. Notably as of Jun 30, 2020, the company’s long-term debt increased 14.8% from 2019 end level with total debt to total capital of 38.5% deteriorating 410 basis points (bps) from 2019 end.
Notably, the Zacks Consensus Estimate for 2020 earnings per share is pegged at $2.60, indicating a decline of 43.4% from the prior year.
We believe these potential headwinds are likely to weigh on the company’s performance in the days ahead.
Stocks to Consider
Some better-ranked stocks in the insurance space include Fidelity National Financial, Inc. (FNF - Free Report) , First American Financial Corporation (FAF - Free Report) and Assurant, Inc. (AIZ - Free Report) . While Fidelity National sports a Zacks Rank #1 (Strong Buy), First American and Assurant carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fidelity National, First American and Assurant have a trailing four-quarter earnings surprise of 32.13%, 20.84% and 6.00%, respectively.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>