"Elevated expenses continue to impose a ceiling on the profitability of the property and casualty business," says analyst Joshua Shanker, cutting AIG to Hold from Buy with price target reduced to $55 from $58. "Management indicates that Fuji unit integration costs will keep expenses high through 2014, which suggests that core ROE may stagnate at around 6% for the foreseeable future."
"While we believe cash flow will ultimately exceed core and GAAP EPS, we believe incremental buyers will need to see additional combined ratio improvement to be motivated to purchase AIG."
Shares -1% premarket
Monday: Leon Cooperman remains a buyer, seeing ROE of 10% and EPS of $6 per share