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AIG Closes Deal to Boost Personal Lines' Client Growth

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American International Group, Inc. (AIG - Free Report) recently closed its deal with the well-established financial-services-focused investment management firm, Stone Point Capital LLC. The terms of the deal were kept under wraps.

The agreement revolved around AIG’s plans, disclosed in February 2023, to establish a standalone Managing General Agency and shift its Private Client Group ("PCG") business to the independent platform. The business will also undergo rebranding to Private Client Select Insurance Services.

The recent collaboration will offer an opportunity to AIG to leverage Stone Point’s longstanding insurance industry expertise and integrate it with its own risk management capabilities and product know-how. This, in turn, is likely to impart strength to AIG in devising enhanced product offerings and better serve high net worth and ultra high net worth client base.

An advanced product portfolio might fetch more customers for AIG and enable it to further strengthen its presence across the promising High and Ultra High Net Worth markets. An increased customer base is likely to provide an impetus to its personal lines insurance business, through which AIG distributes auto, homeowners, umbrella, yacht, fine art and collections insurance to high net worth individuals. The personal insurance unit forms a part of the General Insurance segment, that usually contributes the most to AIG’s top line.

The latest agreement with a leading private equity firm like Stone Point bears testament to AIG’s efforts in seeking ways to support the growth prospects of its PCG business with the help of capital support from high-quality investors and capacity providers.  

In the past, AIG collaborated with the one of the oldest insurance markets in the world, Lloyd’s, to unveil Syndicate 2019 which was entrusted with the responsibility of reinsuring risks from the PCG business. The tie-up offered high net worth clients exposure to enhanced products and risk management solutions offered through the Lloyd’s market.

While collaborations are a means to boost capabilities, AIG also resorts to divestitures in order to intensify focus on further growing the General Insurance unit and shed off its non-core business units.

Shares of AIG have gained 13.3% in a year against the industry’s decline of 0.6%. It currently carries a Zacks Rank #3 (Hold).

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Stocks to Consider

Some better-ranked stocks in the insurance space are Assurant, Inc. (AIZ - Free Report) , CNO Financial Group, Inc. (CNO - Free Report) and American Equity Investment Life Holding Company (AEL - Free Report) . While Assurant sports a Zacks Rank #1 (Strong Buy), CNO Financial and American Equity Investment carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Assurant’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters and missed the mark once, the average beat being 9.96%. The consensus estimate for AIZ’s 2023 earnings suggests an improvement of 3.7%, while the same for revenues indicates growth of 2.7% from the respective year-ago reported figures.

The consensus mark for AIZ’s 2023 earnings has moved 1.7% north in the past 30 days. Shares of Assurant have declined 27.1% in a year.

CNO Financial’s earnings outpaced estimates in two of the trailing four quarters, matched the mark once and missed the same in the remaining one occasion, the average surprise being 15.35%. The Zacks Consensus Estimate for CNO’s 2023 earnings indicates a 19.3% rise, while the same for revenues suggests an improvement of 3.8% from the respective prior-year reported figures.

The consensus mark for CNO’s 2023 earnings has moved 4.1% north in the past 60 days. Shares of CNO Financial have gained 32.7% in a year.

American Equity Investment’s earnings surpassed estimates in three of the last four quarters and missed the mark once, the average surprise being 13.01%. The Zacks Consensus Estimate for AEL’s 2023 earnings indicates an 72.8% surge from the prior-year reported figure.

The consensus mark for AEL’s 2023 earnings has moved up 5% in the past seven days.  Shares of American Equity Investment have rallied 40.2% in a year.

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