Why is AIG so Cheap?

We’re far from the Lehman days.

Andrew Willis 8 October, 2021 | 4:28AM
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Andrew Willis: The China Evergrande saga has reminded us of the bailout days of 2008. And it turns out in the case of AIG (AIG), investors still might not have gotten over it.

We get it – the giant insurer’s past issues have been driven by mismanagement, but we have a new team now and strong bones that should move it towards results on par with peers.

Senior equity analyst Brett Horn says he doesn’t see any structural reasons for AIG to generate poor underwriting performance, and that the market has been slow to react to underlying improvements since the Lehman days.

AIG has made material progress in improving its over/under bets, has one of the widest geographic reaches, and a proprietary database to better price and select risks than smaller peers.

With a positive outlook ahead expected for the P&C insurance business, we believe a sum of parts analysis can uncover a reformed risk worth considering.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
American International Group Inc58.28 USD0.88Rating

About Author

Andrew Willis

Andrew Willis  is Editor for Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

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