On Jan 4, Zacks Investment Research upgraded
American International Group Inc.
) to a Zacks Rank #1 (Strong Buy) from a Zacks Rank #3
Why the Upgrade?
AIG has been experiencing modest corrections in earnings
estimates on the back of an improved outlook for 2014 that should
get a boost from the sale of its aircraft leasing unit -
International Lease Finance Corporation (ILFC). Moreover, the
company's secure core fundamentals and capital position have been
Additionally, this global multi-line insurance giant delivered
positive earnings surprises in all the last 4 quarters with an
average beat of 102.4%. AIG also outperformed the one-year
S&P 500 index return, which posted an increase of 24.9%
against the return of 40.3% clocked by the company.
On Oct 31, AIG reported third-quarter operating earnings per
share of 96 cents, which comfortably surpassed the Zacks
Consensus Estimate of 93 cents. However, the results dipped 3%
from the year-ago quarter number of 99 cents per share. Most of
the downfall was caused by lower revenues and loss of income from
AIA Group Ltd. and Maiden III.
Growth was driven by improved assets under management (AUM),
lower claims and higher premiums within the Life & Retirement
segment. This was partially offset by lower claims and investment
income in the property and casualty (P&C) segment, although
combined ratio improved due to lower expenses.
AIG's diversified business mix, strong enterprise risk
management, stable ratings and improved results raise optimism.
Moreover, the sale of ILFC not only consolidates AIG's core
operations, it also simplifies the company's balance sheet and
increases liquidity. This $5.4 billion sale deal with AerCap
Holdings NV is expected to close by mid-2014. These factors
should boost capital deployment activities going ahead, boosting
investors' confidence in the stock.
The Zacks Consensus Estimate for 2013 moved a penny north at
$4.36 per share in the last 60 days. The estimate for 2014 too
moved up 2 cents to $4.25 over the same period.
Meanwhile, the Most Accurate Estimate for AIG's 2014 earnings
stands at $4.41 a share, resulting in an
Other Insurers Worth a Look
Investors interested in the insurance industry may also
consider stocks like
Endurance Specialty Holdings Ltd.
CNO Financial Group
). All these stocks sport the same Zacks Rank as AIG.
AMER INTL GRP (AIG): Free Stock Analysis
CNO FINL GRP (CNO): Free Stock Analysis
ENDURANCE SPLTY (ENH): Free Stock Analysis
PRUDENTIAL PLC (PUK): Free Stock Analysis
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