"AIG has done a tremendous job in its turnaround efforts, but from here we expect that the pace of further improvements may slow," says Nomura's Cliff Gallant and Matt Rohrmann. "Peers generally reported much stronger Q3 results." Yes the stock continues to trade at a healthy discount to $62.68 book, but with a 6-7% ROE, the discount is warranted, they say.
Current consensus is for 2014 earnings to be flat from $4.31 in 2013 (Nomura's team lowered their 2014 estimate to $4.50 from $4.64).
On the earnings call, management reminded of how important Japan was to it consumer business, and how - like Aflac - it's been hit by the weaker yen. A reversal in that currency could be a catalyst for an earnings surprise, suggests Dimitra Defotis.
Separately, the insurer is overhauling oversight of its $358B investment portfolio, naming Brian Schreiber and Geoffrey Cornell deputy CIOs and moving previous CIO Monika Machon to the Treasurer post (which Schreiber previously held). They are presumably being groomed to take over William Dooley, the company's 60-year old EVP of investments.
The stock remains under heavy pressure, -6.4%.
Previous AIG earnings coverage.