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On Tuesday, Keefe, Bruyette & Woods maintained a positive outlook on American International Group (NYSE:AIG) shares, raising the price target to $98 from the previous $90 while reiterating an Outperform rating. The adjustment follows AIG’s Investor Day held on Monday, which presented a compelling narrative for the insurer’s growth prospects.
The firm’s analyst, Meyer Shields, highlighted AIG’s transformation, noting its robust reserves, considerable capital flexibility, and advanced AI capabilities. These factors are believed to pave the way for a 20%-plus earnings per share (EPS) compound annual growth rate (CAGR) and substantial return on equity (ROE) expansion in the upcoming years. With a current P/E ratio of 22.78x and management actively buying back shares, Shields anticipates these improvements to contribute to a continued expansion of the company’s trading multiple. InvestingPro analysis suggests the stock is fairly valued at current levels, with 8 additional exclusive insights available to subscribers.
The analyst’s optimism is grounded in AIG’s Investor Day revelations, which showcased the insurer’s strategies for achieving its financial targets. Shields expects that the company’s solid premium growth, coupled with its innovative approaches, will significantly enhance profitability. The company has demonstrated its commitment to shareholder returns, maintaining dividend payments for 13 consecutive years with a current yield of 1.84% and recent dividend growth of 11.11%.
Keefe, Bruyette & Woods has affirmed its EPS estimates for 2025 and 2026 at $6.25 and $7.85, respectively. The estimates factor in an acceleration in premium growth balanced by a higher share count, reflective of the stock’s robust year-to-date performance. Moreover, the firm has introduced a 2027 EPS estimate of $8.65, based on expectations of sustained premium and net investment income growth, as well as improvements in the Global Personal Insurance underwriting margin.
Shields concluded with a positive projection for AIG’s future, stating, "We think AIG’s investor day showcased a transformed company with solid reserves, significant capital flexibility, and innovative AI capabilities that support clear pathways toward a 20%-plus EPS CAGR and significant ROE expansion in coming years, which we think will drive ongoing multiple expansion." The firm’s stance indicates confidence in AIG’s strategic direction and its potential to generate enhanced shareholder value.
In other recent news, American International Group (AIG) announced a new $7.5 billion share repurchase program, including $3.4 billion from a previous authorization. This move coincides with AIG’s Investor Day event, where the company revealed ambitious financial targets, such as an Operating Earnings Per Share (EPS) Compound Annual Growth Rate (CAGR) of over 20% from 2025 to 2027. AIG also aims for a core operating Return on Equity (ROE) between 10% and 13% during the same period, focusing on maintaining a General Insurance expense ratio below 30%. Additionally, the company plans to increase its dividend per share at a CAGR of over 10% for 2025 and 2026. Analysts from Keefe, Bruyette & Woods reiterated their Outperform rating on AIG, maintaining a $90 price target, citing the company’s strategic initiatives and reserve adequacy. Meanwhile, BMO Capital Markets kept a Market Perform rating with an updated price target of $83, reflecting adjustments in AIG’s capital management plans and expectations for future share buybacks. These developments highlight AIG’s strategic focus on capital allocation and growth opportunities, with analysts expressing varied outlooks on the company’s financial trajectory.
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