Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - Goldman Sachs has lowered its price target on American International Group (NYSE:AIG) stock to $85.00 from its previous target, while maintaining a Neutral rating on the insurance giant. Currently trading at $78.94, AIG appears undervalued according to InvestingPro analysis, with analysts setting targets ranging from $79 to $97.
The price target reduction follows AIG’s second-quarter 2025 earnings report, with Goldman Sachs citing pressures on the underlying loss ratio, though these were offset by higher net investment income from stronger invested asset growth. The firm has weakened its 2025-2027 Commercial and International Commercial underlying loss ratios by approximately 60 basis points. Despite these challenges, AIG maintains strong fundamentals with a gross profit margin of 33.2% and has demonstrated consistent dividend payments for 13 consecutive years.
Goldman Sachs attributes the deterioration in North American Commercial segments to mix shift and ULAE allocation, while International Commercial’s deterioration stems from rate versus trend dynamics, mix shift, and ULAE allocation. The firm noted particular weakness in the international rate environment, which fell to -3% in the second quarter of 2025 compared to +2% in the first quarter.
Despite these pressures, Goldman Sachs views the stronger-than-expected invested asset growth as sustainable, particularly given the meaningful growth in casualty premiums. The firm has modestly increased its 2025 GOE ratio estimate while maintaining flat total General Insurance expense ratio estimates for 2026/2027.
The 4% reduction in price target reflects a modestly greater income weighting to net investment income and a broader de-rating of insurance carriers, according to Goldman Sachs, which projects an 11% total return potential for AIG stock. With an attractive P/E ratio of 14.6x and strong return metrics, AIG shows promising potential. Discover more insights and 8 additional key ProTips about AIG with InvestingPro, including detailed analysis in the comprehensive Pro Research Report.
In other recent news, American International Group (AIG) surpassed Wall Street expectations in its second-quarter earnings for 2025, with a notable increase in earnings per share and revenue. Despite these strong financial results, the company’s stock declined, influenced by broader market trends. Jefferies recently adjusted its price target for AIG, lowering it from $98 to $96, while maintaining a Buy rating. This adjustment was attributed to disappointing underlying results and a deterioration in rate and trend commentary. Similarly, CFRA reduced its price target for AIG from $95 to $90, also keeping a Buy rating, citing mixed top-line trends, including a modest 3% rise in General Insurance written premiums during the second quarter. These developments highlight the mixed sentiment among analysts despite AIG’s positive earnings performance.
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