We recently published a list of the 10 Most Undervalued Insurance Stocks to Buy Now. In this article, we are going to take a look at where American International Group, Inc. (NYSE:AIG) stands against the other undervalued insurance stocks.

The insurance industry has performed better in 2025 than the broader market. The S&P 500 index, which tracks large-cap stocks, has declined over 4.50% so far in 2025. In comparison, two of the leading insurance ETFs, the S&P Insurance ETF and the iShares US Insurance ETF, have surged over 3% and 4.50% year-to-date, respectively.

Insurance Industry in the United States

Despite the losses from wildfires, the analysts see a higher upside for insurance stocks compared to the broader market. There are different reports on the insured losses in Los Angeles. Verisk anticipates insured losses between $28 billion and $35 billion. At the same time, a new report from the UCLA Anderson Forecast indicates that wildfires in L.A. County may have caused total losses ranging between $95 billion and $164 billion, with insured losses estimated at $75 billion.

Earlier in January, Fitch Ratings reported that the losses are likely to “materially exceed” highs from past wildfire events but are unlikely to impact the ratings of property and casualty (P&C) insurers and reinsurers.

“Insured losses should remain within rating sensitivities for affected insurers, given ample capital levels, diversified risk exposure, and insurers’ ability to increase premium rates,” Fitch Ratings said.

Despite the losses, the insurance industry in the U.S. is overall balanced and remains positive. The U.S. has the largest insurance market in the world. The combined value of America’s insurance market is approximately $1.7 trillion, as of 2025. The U.S. has some of the largest insurance companies by assets that influence the global insurance markets.

The P&C insurance sector in the U.S. generated $9.3 billion in underwriting gains during the first quarter of 2024, according to a report by Deloitte. This was a major improvement from an $8.5 billion loss in Q1 2023. The industry also increased its combined ratio to 94.2%, driven by increases in rates in the personal lines sector outweighing the cost of claims.

An aerial view of a metropolitan skyline with the offices of the insurance company in the center.

Our Methodology

We used a Finviz screener to shortlist Insurance companies with a forward P/E under 20. Finally, we listed the most undervalued insurance stocks based on the number of hedge fund holders, as of Q4 2024. The stocks are ranked in ascending order of the hedge fund sentiment.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

American International Group, Inc. (NYSE:AIG)

Forward P/E: 12.84

No. of Hedge Fund Holders: 48

American International Group, Inc. (NYSE:AIG) is a global insurance and financial services company providing property and casualty insurance, life insurance, retirement solutions, and other financial products. The company manages risk through underwriting, reinsurance, and claims management while leveraging technology and analytics to optimize operations. AIG offers insurance-related services to individuals, businesses, and companies across North America, Europe, and Asia. The company has also implemented its first generative AI solution to support business growth through automated data extraction for underwriting.

On February 14, Keefe, Bruyette & Woods analyst Meyer Shields increased the price target of AIG shares from $87 to $90, keeping an Outperform rating on the stock. The analyst is bullish on AIG because of its sustained underwriting margin progress which is expected to generate solid results for the company in 2025.

American International Group, Inc. (NYSE:AIG) posted solid results in the fourth quarter of 2024. AIG achieved net premiums written of $6.1 billion, up by 7% from a year ago, driven by 8% growth in Global Commercial Lines. The company achieved a notable combined ratio of 92.5% in 2024 while the accident combined ratio was around 88.6% throughout the year. General Insurance posted net premiums written of $23.9 billion, a 6% increase year-over-year, marking the third consecutive year of a sub-92 % combined ratio. For 2025, the company is well-positioned to achieve its target of 10% plus core ROE.

Overall AIG ranks 6th on our list of the Most Undervalued Insurance Stocks to Buy Now. While we acknowledge the potential of AIG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AIG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Invest In According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.