AIG Gets a Report Card
Thursday, June 09, 2021 11:00 AM

Analysts are just getting around to ranking American International Group Inc.'s (NYSE:AIG) post-“re-IPO” performance, and the reviews are generally positive, though not “Strong Buy” positive.

In late-May, the insurance company sold $9 billion of the federal government's investment stake in a public stock offering. American International was at the center of the real estate meltdown that wrecked the economy and the fortunes of AIG and several investment banks. The federal government bailed out AIG and some of the investment banks in an effort to shore up the economy with the understanding the loans be paid back.

AIG's “re-IPO” represented a step in that process, but taxpayers via the federal government still own about 75 percent of AIG shares.

So, how's our investment doing?

AIG says it's doing just fine, so fine that it expects to soon reach a 10 percent return on equity.

The investment pros, however, have mixed feelings. They are looking at two basic issues – is that ROE estimate too aggressive and does that government's continued involvement scare away investors?

Deutsche Bank rates AGI a Buy and says its fundamentals look good and that investors who take a careful look at the company and the recent history of government investments shouldn't be scared away. It should be noted that DB helped AIG with an earlier IPO of its Asian insurance business, an IPO that was seen by the investment community and federal government as something of a referendum on investor willingness to buy into government controlled companies.

Morgan Stanley, Barclays Capital and Goldman Sachs (which also helped on the Asian deal) all have variations on Neutral ratings in place.

Goldman, which rates the stock a Neutral, says the U.S. Treasury Department's ownership stake creates an obstacle for investors.

Morgan Stanley, which has the stock at Equal Weight, says ROE could grow to 8.2 percent by 2015 from 6.3 percent today, but 10 percent in the near term is too aggressive.

Barclays Capital, which rates AIG Equal Weight 2, says the company is rebounding, but that it sees ROE of around 7 percent through next year, a rate lower than its peer group.

AIG was trading at $28.10, up 2.86 percent, or $0.78.