Why American International Group Shares Are Down Today
Portfolio Pulse from Lekha Gupta
BofA Securities analyst Joshua Shanker downgraded American International Group Inc (AIG) to Neutral from Buy, despite strong Q4 results, due to anticipated difficulties in 2024 including the impact of selling the Validus reinsurance business to RenaissanceRe and a divestiture plan by Corebridge Financial Inc (CRBG) affecting AIG's EPS. Shanker raised AIG's price target to $77 from $75 but expects a slower trend toward higher investment yields and lower EPS forecasts for the coming years.
February 20, 2024 | 7:11 pm
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NEGATIVE IMPACT
AIG was downgraded to Neutral from Buy by BofA Securities' Joshua Shanker, despite outperforming Q4 earnings expectations. The downgrade is based on anticipated challenges in 2024, including the impact of the Validus reinsurance business sale and a slower trend toward higher investment yields.
The downgrade by a prominent analyst based on anticipated difficulties in 2024, including the impact of strategic divestitures and a slower trend in investment yields, is likely to negatively impact investor sentiment and AIG's stock price in the short term.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
NEUTRAL IMPACT
Corebridge Financial Inc's plan to divest its U.K. life insurance business, operating as AIG Life Limited, is cited as a factor contributing to a lower EPS forecast for AIG, indicating a potential negative impact on CRBG's strategic positioning.
While the divestiture plan by CRBG is directly impacting AIG's EPS forecast, the immediate short-term impact on CRBG's stock price is uncertain, as the strategic move could be viewed both positively or negatively by investors depending on the perceived benefits of the divestiture.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70