On Apr 10, shares of American International Group, Inc. AIG scaled a 52-week high of $56.79 on the back of portfolio restructuring initiatives.
The one-year return from the stock came in at 14.6%, which was higher than the S&P 500’s return of 13.2%.
The New York-based company is continuing with its portfolio restructuring strategy. Not only is the company focusing on the development of its inorganic growth story, but it is also shedding its non-core assets.
On Apr 1, the company completed the takeover of Ireland’s second-largest health insurance provider – Laya Healthcare. The deal will enhance American International’s competitive and operating leverage as well as expose it to the emerging European market. Moreover, the deal will strengthen the company’s core insurance business globally.
Further, on Apr 2, American International announced the closure of acquisition of a controlling stake in one of the leading U.S. managing general agent and insurance program administrator – NSM Insurance Group. The company purchased the stake from ABRY Partners and NSM management. This takeover enhances the company’s strategy of diversifying its product offerings and provides its customers with greater access to unique insurance programs.
Apart from strengthening its global footprint, the company is also divesting its 46% stake in the airplane lessor, AerCap Holdings NV. The terms of sale had mandated American International to hold the entire 46% stake in AerCap for at least nine months, post which one-third sale was granted.
After a holding period of another three months, another 33% stake could be disposed, following which complete exit was possible in next three months. The deal appears to complement the growth policies of both AerCap and American International.
Divesture of AerCap will help American International focus on its core operations, which include property and casualty (P&C), life and retirement insurance business lines. Also, the sale will add to the company’s liquidity and improve its capital position, thereby making way for a leaner balance sheet.
Currently, American International carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Better-ranked stocks from the insurance sector include AXIS Capital Holdings Ltd. AXS, Cigna Corp. CI and James River Group Holdings, Ltd. JRVR. While AXIS Capital Holdings sports a Zacks Rank #1 (Strong Buy), Cigna and James River Group hold a Zacks Rank #2 (Buy).
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