- 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
More on AIG upgrade at BAML
Jan 28 2014, 11:55 ET