Macquarie Group Analyst Amit Kumar says he thinks American International Group Inc (AIG) is one of the best values is the insurance sector. He says AIG has downside protection because of a number of factors working in the company’s favor.
“Number one is their mix of business between P&C and life,” Kumar says. “The underlying trends in AIG’s P&C book have been stabilizing, and AIG’s life and retirement business continues to make strong contributions to earnings, which recently have been more than the P&C.”
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Kumar says that as AIG continues to turn around and fix old legacy issues, its ROEs will continue to go up. And, he says AIG’s return to capital management is also working in the company’s favor.
“We saw that they announced a new share repurchase program and also reinstituted a quarterly dividend last summer, both of which they have since increased,” Kumar says. “My sense is that the recently closed sale of ILFC also gives the company additional excess capital, and that could be put to use in terms of buying back their stock.”
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