Seeking Alpha

More on AIG upgrade at BAML

  • Back at levels just following its disappointing Q3 results, AIG  - at 0.75x book (ex-AOCI) and 9.4x  estimated 2015 EPS - is the best value in property and casualty, says BAML's Jay Cohen, noting the rest of the non-life sector trades at 1.17x book.
  • P&C did show a loss of $135M in Q3, but that compared to $441M a year earlier, and the combined ratio improved to 101.6 from 105 - not as good as AIG's profitable competitors, but there lies the room to get better. Allstate (ALL), by contrast, reported a profit in the business and a combined ratio of 93.1%.
  • Another catalyst will be the payoff in the form of lower expenses after two years of heavy investments in underwriting and financial reporting systems.
  • Finally, there's the sale of ILFC to AerCap which is expected to close in Q2. Cohen expects $10B in buybacks over the next two years, partly funded with $5.8B coming from the ILFC sale.
  • The stock's ahead 2.9% today.
  • Earlier coverage
Comments (4)
  • Oh yeah!!
    28 Jan, 12:55 PM Reply Like
  • AIG- You just have to own it !
    28 Jan, 05:19 PM Reply Like
  • 84-90 USD in 24 months.
    28 Jan, 05:23 PM Reply Like
  • 84-90 USD in 24 months?
    I really hope so. I'm betting on it.
    29 Jan, 08:05 PM Reply Like
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