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.