On Monday, RBC Capital maintained its Outperform rating on shares of American International Group (NYSE:AIG), with a continued stock price target of $87.00. The firm anticipates that AIG will seek to further decrease its ownership in Corebridge Financial (CRBG) over the coming quarters. This follows the recent agreement where Nippon Life will acquire a 20% stake in CRBG, a transaction expected to be finalized by the first quarter of 2025.
The analyst from RBC Capital noted that they had previously projected the deconsolidation of CRBG from AIG's financials to begin in the third quarter of 2024. While the deconsolidation will eliminate a source of earnings for AIG, it is also expected to lead to a reduction in certain parent company expenses related to Corebridge. Meanwhile, AIG will benefit from dividend income, receiving a quarterly dividend of $0.23 per share from its remaining CRBG shares.
The process of separating AIG from CRBG began with the latter's initial public offering (IPO) in September 2022. Today's announcement, though not unexpected, was seen as a significant step in AIG's transition to becoming exclusively a property and casualty (P&C) insurance company. The analyst views this development as a key milestone in AIG's ongoing transformation.
In other recent news, American International Group (AIG) has made significant strides in restructuring its financial landscape. The global insurance firm has completed the deconsolidation of Corebridge Financial, reducing its representation on the board while still retaining a substantial stake. This move follows AIG's strategic decision to monetize its life insurance stake in Corebridge and implement cost efficiency programs.
AIG's recent sale of an additional 30 million shares of Corebridge has resulted in a reduction of AIG's pro forma ownership to approximately 48.4%. This aligns with AIG's goal to deconsolidate its financial statements by the third quarter of 2024.
In terms of financial outlook, AIG's earnings per share (EPS) estimates for the second quarter of 2024 are set at $1.88, with a gradual decrease anticipated in the following years before an upturn in 2026. The company also aims for a 13% expense reduction, a move viewed positively by analysts from firms such as Keefe, Bruyette & Woods, Piper Sandler, and Morgan Stanley.
Various analyst firms have maintained their ratings on AIG's stock. BMO Capital Markets has given an Outperform rating with a price target raised to $89.00. Keefe, Bruyette & Woods maintained its Outperform rating and $87.00 price target for AIG shares, while Piper Sandler reaffirmed its Overweight rating with a steady price target of $89.00. Morgan Stanley maintained its Equalweight rating with a consistent price target of $82.00.
These are recent developments and investors are advised to keep an eye on AIG's ongoing strategic maneuvers and their potential impact on the company's financial health.
InvestingPro Insights
As American International Group (AIG) continues its strategic shift towards a property and casualty focus, real-time data and insights from InvestingPro provide a deeper understanding of the company's current financial health and market position. With a market capitalization of $50.48 billion and a price-to-earnings (P/E) ratio that has adjusted to 10.77 over the last twelve months as of Q1 2024, AIG shows a valuation that could be appealing to value-oriented investors. The company's P/E ratio is complemented by a price/book value of 1.17, indicating that the stock may be reasonably valued in relation to its assets.
InvestingPro Tips highlight AIG's proactive management, evidenced by aggressive share buybacks and a high shareholder yield. Moreover, AIG has demonstrated a commitment to returning value to shareholders, maintaining dividend payments for 12 consecutive years with a current dividend yield of 2.1%. These aspects are particularly relevant as RBC Capital maintains its Outperform rating, with an eye on the company's future profitability, which is also echoed by analysts predicting AIG to be profitable this year.
Interested readers can find additional InvestingPro Tips for AIG, which may offer further insight into the company's potential. For those considering an in-depth analysis, InvestingPro offers more tips, and by using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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