American International Group, Inc. AIG benefits from rate increases, strategic divestitures, cost-curbing efforts, technological advancements and sound cash reserves.

AIG’s Zacks Rank & Price Performance

AIG currently carries a Zacks Rank #3 (Hold).

The stock has gained 5.7% in the past year.

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AIG’s Robust Growth Prospects

The Zacks Consensus Estimate for 2025 earnings is pegged at $6.50 per share, indicating 32.2% growth from the 2024 estimate. The estimate for revenues is $27.8 billion, which suggests a rise of 3.1% from the 2024 estimate.

AIG’s Decent Earnings Surprise History

AIG’s bottom line surpassed earnings estimates in three of the trailing four quarters and missed the mark once, the average surprise being 2.88%.

AIG’s Business Tailwinds

The company’s revenues benefit from rate increases, new business generation and strong retention rates across the Commercial and Personal lines of business. This, in turn, continues to drive the General Insurance segment. 

The investment portfolio of AIG generates improved returns from alternative investments, equity and fixed maturity securities. AIG intends to utilize capital for pursuing possible buyouts in international markets with an aim to strengthen the company's personal business stream. 

The company has been undertaking divestitures to focus on core insurance business and eliminate underperforming ones. The company has adopted a strategy focused on deleveraging its balance sheet and driving growth. Key milestones include the sale of a 20% stake to Nippon Life Insurance in May 2024 and AIG's global individual personal travel insurance business to Zurich Insurance Group in December 2024.

AIG has demonstrated progress in reducing expenses, driven by a shift in its business mix, stringent cost management and an improved premium base. These measures are expected to enhance operational efficiency and boost operating margins. To support its digital transformation, AIG selected Amazon Web Services as its preferred public cloud provider, enabling large-scale technological advancements. 

AIG boasts a strong liquidity position backed by a solid cash balance and reducing debt level. This enables it to engage in prudent deployment of capital via share buybacks and dividend payments. Its leverage ratio has been improving, with total debt to total capital of 18.2% at the third-quarter end remaining below the industry’s average of 31.4%.

Key Risks

Despite the upside potential, there are a few factors that investors should keep an eye on.

AIG grapples with a deteriorating combined ratio within the North America Commercial Lines business, resulting from a higher loss ratio from business mix changes.  Additionally, exposure to weather-related catastrophe losses, totaling $853 million in the first nine months of 2024, pressures underwriting margins and bottom-line growth.

Stocks to Consider

Some better-ranked stocks in the insurance space are CNO Financial Group, Inc. CNO, Primerica, Inc. PRI and Cincinnati Financial Corporation CINF. While CNO Financial currently sports a Zacks Rank #1 (Strong Buy), Primerica and Cincinnati Financial carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

CNO Financial’s earnings surpassed estimates in three of the last four quarters and missed the mark once, the average surprise being 24.51%. The Zacks Consensus Estimate for CNO’s 2025 earnings indicates a rise of 0.6%, while the same for revenues implies an improvement of 3.9% from the respective 2024 estimates. The consensus mark for CNO’s 2025 earnings has moved 1.3% north in the past 60 days. 

The bottom line of Primerica beat estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 4.89%. The Zacks Consensus Estimate for PRI’s 2025 earnings indicates a rise of 6%, while the same for revenues implies an improvement of 4.6% from the respective 2024 estimates. The consensus mark for PRI’s 2025 earnings has moved 0.7% north in the past 60 days.

Cincinnati Financial’s earnings outpaced estimates in three of the trailing four quarters and missed the mark once, the average surprise being 12.54%. The Zacks Consensus Estimate for CINF’s 2025 earnings indicates a rise of 15.3%, while the same for revenues implies an improvement of 12.8% from the respective year-ago estimates. The consensus mark for CINF’s 2025 earnings has moved 1.1% north in the past 60 days.

Shares of CNO Financial, Primerica and Cincinnati Financial have gained 37.8%, 30.6% and 32.5%, respectively, in the past year.

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American International Group, Inc. (AIG) : Free Stock Analysis Report

CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report

Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

Primerica, Inc. (PRI) : Free Stock Analysis Report

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