American International Group (Photo credit: Wikipedia)
Zacks Investment Research did an upgrade of The American International Group Inc. , AIG, from Zacks rank of number 3 to Zacks rank of number 1 (a Strong Buy). If you are wondering why this upgrade was done, probably it is because you have noticed the few changes that AIG have been facing in the past few years. AIG has seen a shift in its earnings over the past period and currently, it is looking to boost its quarterly numbers with the sale of its aircraft unit ILFC. It has also been solid on its capital position and has remained steadfast on its core fundamentals.
AIG as an insurance powerhouse gave a positive position in its earnings this last quarter, giving off a 102.4% beat on average. It outperformed the S&P index return this last one year, increasing AIG's returns by 24.9%.
Zacks Strong Buy did an impressive number in the third quarter of 2013, having an operating earnings share of 96c, an above-estimate figure from Zacks census by 3%. Though the company made a 3% deep from last year's per share index of 99c, analysts confirmed that the downward trend was largely caused by the sinking in revenues and income losses from AIA and Maiden III.
Strong Buy saw many gains through the improvement of assets that were under management. AIG's lower amounts in claims and higher acquisition from premiums in the life & retirement packages also contributed a great deal. However, AIG's numbers were offset slightly by the P&C segments, which had lower investor incomes, though the ratios still balanced out as the expenses here were a bit lower.
Optimism is high today, as AIG is promising a better future as a company because of its adept nature in risk management, AIG's skill in doing a good business mix, its stability in ratings and general improvement in delivery. In selling IFLC, AIG is planning to tighten its core operations, and make the balance sheet simpler. AIG will also increase its liquidity. Zack's Strong Buy deal with AerCap Holdings, worth $4.5 billion will be expected to come to a close by June or July this year. AIG will thus be able to boost investor confidence, capital deployment and delivery.
AIG's 2014 numbers stand to go to $4.41 per share according to the census, and most likely can cause a 3.8% ESP earning.