We are downgrading our recommendation on American International Group (AIG) to Underperform on weak global cues, sluggish insurance dynamics and consistent cash outflow. The lock-in period for stock offering further holds back the attainment of capital flexibility in the near term. Higher restructuring charges and increasing losses from catastrophes, underwriting and investments along with adverse reserve developments are also affecting stock price declines.
Even the second-quarter earnings lagged the Zacks Consensus Estimate and year-over-year results, although operating earnings were impressive year over year based on some core operating stability. Asset disposals and repayment of a chunk of debt appeared favorable for the ROE and book value growth.
AIG is poised to accentuate its operating and capital leverage upon dilution of government stake though it is a farfetched goal due to absence of any growth catalyst. Risks of execution amid intense competition also prevail.
AMER INTL GRP (AIG): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment