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.
Reasons to Hold American International (AIG) Stock Right Now
Read MoreHide Full Article
American International Group, Inc. (AIG - Free Report) is well-poised to grow due to strong Global Commercial business, improving net investment income and new business growth.
AIG continues to benefit from strong performance in its General Insurance business and the strengthening of insurance rates. Moreover, divestitures are helping the company to streamline its business and enhance capital allocation.
AIG is a leading global insurance organization providing a wide range of property casualty insurance, life insurance, retirement solutions and other financial services.
Zacks Rank & Price Performance
American International currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 11.9% compared with the industry’s growth of 0.2%.
Image Source: Zacks Investment Research
Rising Estimates
The Zacks Consensus Estimate for AIG’s 2023 earnings per share is pegged at $6.71, indicating a 47.5% increase from the year-ago reported figure of $4.55. The Zacks Consensus Estimate for AIG’s 2023 sales is pegged at $51.4 billion, indicating a 13.2% increase from the year-ago reported figure of $45.4 billion.
The company beat earnings estimates in each of the last four quarters, the average surprise being 13.5%.
Key Drivers
In the first half of 2023, a significant portion of AIG’s total revenues came from premiums, which improved 19.9% year over year. The figures are expected to grow further in the future due to strong performance in commercial lines and rate increases contributing to higher pricing.
The General Insurance segment accounted for 55.4% of total revenues in the first half of 2023. This segment delivered strong results in the second quarter due to the improving performance of Lexington and Global Commercial businesses. North America Commercial is expected to aid the results of this business segment due to strong growth in net premiums thanks to Lexington and Retail Property. Strong retention, rate increases and new businesses have been the key drivers for the Lexington business.
Total net investment income increased 21.6% year over year in the first half of 2023. A high-interest rate environment should provide an impetus to growth in net investment income. In order to take advantage of higher interest rates, AIG has repositioned its General Insurance portfolio to gain higher yields but remains careful about maintaining credit quality and duration. This is likely to result in higher net investment income in 2023.
The company is delivering well on its objective to deliver 10% plus adjusted return on capital employed. In July 2023, it closed the sale of its Crop Risk Services to AFG and formed Private Client Select with Stone Point Capital LLC., to streamline its operations and enhance earnings quality.
The company rewarded its shareholders with $554 million in repurchases and dividends worth $268 million in the second quarter, reflecting its balanced capital management strategy. This implies that the company’s shares are a good buy for investors looking for returns in the form of dividends.
However, AIG’s rising expense level is a concern. Its total benefits and expenses increased 19% in the first half of 2023. We expect the metric to increase 16.9% in 2023. American International’s return on equity of 9.3% is lower than the industry’s average of 10.8%. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 26.8%. The Zacks Consensus Estimate for ACGL’s 2023 earnings and revenues indicates a rise of 38.2% and 30.6%, respectively, from the year-ago actuals. The consensus mark for ACGL’s 2023 earnings has moved 2.3% north in the past 30 days.
The bottom line of Aflac beat estimates in each of the trailing four quarters, the average beat being 7.8%. The Zacks Consensus Estimate for AFL’s 2023 earnings indicates a rise of 12.2% from the year-ago tally. The consensus mark for AFL’s 2023 earnings has moved 1.4% north in the past 30 days.
Chubb’s earnings outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 3.4%. The Zacks Consensus Estimate for CB’s 2023 earnings indicates a rise of 19.3%, while the same for revenues suggests an improvement of 8.8% from the respective year-ago actuals. The consensus mark for CB’s 2023 earnings has moved 0.8%north in the past 30 days.
Shares of Arch Capital, Aflac and Chubb have gained 68.4%, 24.6% and 5.1%, respectively, in a year.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Reasons to Hold American International (AIG) Stock Right Now
American International Group, Inc. (AIG - Free Report) is well-poised to grow due to strong Global Commercial business, improving net investment income and new business growth.
AIG continues to benefit from strong performance in its General Insurance business and the strengthening of insurance rates. Moreover, divestitures are helping the company to streamline its business and enhance capital allocation.
AIG is a leading global insurance organization providing a wide range of property casualty insurance, life insurance, retirement solutions and other financial services.
Zacks Rank & Price Performance
American International currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 11.9% compared with the industry’s growth of 0.2%.
Image Source: Zacks Investment Research
Rising Estimates
The Zacks Consensus Estimate for AIG’s 2023 earnings per share is pegged at $6.71, indicating a 47.5% increase from the year-ago reported figure of $4.55. The Zacks Consensus Estimate for AIG’s 2023 sales is pegged at $51.4 billion, indicating a 13.2% increase from the year-ago reported figure of $45.4 billion.
The company beat earnings estimates in each of the last four quarters, the average surprise being 13.5%.
Key Drivers
In the first half of 2023, a significant portion of AIG’s total revenues came from premiums, which improved 19.9% year over year. The figures are expected to grow further in the future due to strong performance in commercial lines and rate increases contributing to higher pricing.
The General Insurance segment accounted for 55.4% of total revenues in the first half of 2023. This segment delivered strong results in the second quarter due to the improving performance of Lexington and Global Commercial businesses. North America Commercial is expected to aid the results of this business segment due to strong growth in net premiums thanks to Lexington and Retail Property. Strong retention, rate increases and new businesses have been the key drivers for the Lexington business.
Total net investment income increased 21.6% year over year in the first half of 2023. A high-interest rate environment should provide an impetus to growth in net investment income. In order to take advantage of higher interest rates, AIG has repositioned its General Insurance portfolio to gain higher yields but remains careful about maintaining credit quality and duration. This is likely to result in higher net investment income in 2023.
The company is delivering well on its objective to deliver 10% plus adjusted return on capital employed. In July 2023, it closed the sale of its Crop Risk Services to AFG and formed Private Client Select with Stone Point Capital LLC., to streamline its operations and enhance earnings quality.
The company rewarded its shareholders with $554 million in repurchases and dividends worth $268 million in the second quarter, reflecting its balanced capital management strategy. This implies that the company’s shares are a good buy for investors looking for returns in the form of dividends.
However, AIG’s rising expense level is a concern. Its total benefits and expenses increased 19% in the first half of 2023. We expect the metric to increase 16.9% in 2023. American International’s return on equity of 9.3% is lower than the industry’s average of 10.8%. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Stocks to Consider
Some better-ranked stocks in the insurance space include Arch Capital Group Ltd. (ACGL - Free Report) , Aflac Incorporated (AFL - Free Report) and Chubb Limited (CB - Free Report) . Arch Capital currently sports a Zacks Rank #1 (Strong Buy), while Aflac and Chubb carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 26.8%. The Zacks Consensus Estimate for ACGL’s 2023 earnings and revenues indicates a rise of 38.2% and 30.6%, respectively, from the year-ago actuals. The consensus mark for ACGL’s 2023 earnings has moved 2.3% north in the past 30 days.
The bottom line of Aflac beat estimates in each of the trailing four quarters, the average beat being 7.8%. The Zacks Consensus Estimate for AFL’s 2023 earnings indicates a rise of 12.2% from the year-ago tally. The consensus mark for AFL’s 2023 earnings has moved 1.4% north in the past 30 days.
Chubb’s earnings outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 3.4%. The Zacks Consensus Estimate for CB’s 2023 earnings indicates a rise of 19.3%, while the same for revenues suggests an improvement of 8.8% from the respective year-ago actuals. The consensus mark for CB’s 2023 earnings has moved 0.8%north in the past 30 days.
Shares of Arch Capital, Aflac and Chubb have gained 68.4%, 24.6% and 5.1%, respectively, in a year.