Stock Analysis & Valuation American International Group, Inc. (AIG.SW)

• Previous Close: CHF47.85
• Sector Valuation Confidence Level: High

Valuation method	Value, CHF	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	20.60	-57
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

American International Group, Inc. (AIG) is a global leader in insurance and financial services, offering a diversified portfolio of insurance products for commercial, institutional, and individual clients. Headquartered in New York, AIG operates through two primary segments: General Insurance and Life & Retirement. The General Insurance segment provides a broad range of coverage, including liability, property, and specialty insurance, while the Life & Retirement segment focuses on annuities, life insurance, and retirement solutions. With a history dating back to 1919, AIG has established a strong presence in North America and internationally, leveraging a multi-channel distribution network that includes independent agents, financial advisors, and direct marketing. The company's resilience and adaptability in the dynamic insurance sector make it a key player in risk management and financial security. AIG's commitment to innovation and customer-centric solutions positions it as a trusted partner in an industry marked by evolving risks and regulatory complexities.

Investment Summary

AIG presents a mixed investment profile. On the positive side, the company boasts a strong market position, diversified product offerings, and a global footprint, which provide stability and growth potential. However, recent financials show a net income loss of CHF 1.404 billion, raising concerns about profitability. The diluted EPS of CHF 3.35 and operating cash flow of CHF 3.273 billion indicate some operational strength, but the high beta of 1.15 suggests volatility relative to the market. The dividend yield, with a payout of CHF 1.30 per share, may appeal to income-focused investors, but the negative net income warrants caution. Investors should weigh AIG's brand strength and diversified revenue streams against its profitability challenges and exposure to macroeconomic risks in the insurance sector.

Competitive Analysis

AIG competes in the highly competitive global insurance market, where differentiation is driven by product breadth, underwriting expertise, and distribution networks. The company's competitive advantage lies in its diversified portfolio, spanning commercial, personal, and specialty insurance, as well as life and retirement products. This diversification mitigates risk and allows AIG to capitalize on cross-selling opportunities. AIG's strong brand recognition and global presence enhance its ability to attract large corporate clients and high-net-worth individuals. However, the company faces intense competition from both traditional insurers and insurtech innovators, which could pressure margins. AIG's underwriting discipline and risk management capabilities are critical to maintaining profitability, especially in volatile segments like property and casualty insurance. The Life & Retirement segment benefits from long-term customer relationships but is sensitive to interest rate fluctuations. AIG's ability to leverage technology for operational efficiency and customer engagement will be key to sustaining its competitive edge in an increasingly digital landscape.

Major Competitors

• Allstate Corporation (ALL): Allstate is a major competitor in the U.S. insurance market, known for its strong brand and extensive personal lines coverage, including auto and homeowners insurance. While Allstate has a robust direct-to-consumer model, it lacks AIG's global reach and diversified commercial insurance offerings. Allstate's focus on technology and telematics gives it an edge in personal lines but may limit its appeal to large corporate clients.
• American Express Company (AXP): American Express competes indirectly with AIG through its travel insurance and premium card offerings. While not a direct competitor in most insurance segments, Amex's strong customer loyalty and premium brand positioning overlap with AIG's high-net-worth clientele. However, Amex lacks AIG's breadth in commercial and specialty insurance.
• Chubb Limited (CB): Chubb is a formidable competitor with a strong presence in commercial and specialty insurance, similar to AIG. Chubb's underwriting discipline and global footprint make it a direct rival, particularly in high-net-worth and corporate segments. Chubb's consistent profitability contrasts with AIG's recent losses, but AIG's broader life and retirement offerings provide diversification.
• MetLife, Inc. (MET): MetLife competes with AIG primarily in the life and retirement segment, offering annuities, life insurance, and employee benefits. MetLife's strong brand and scale in group benefits give it an advantage in certain markets, but it lacks AIG's extensive commercial insurance capabilities. AIG's broader product mix provides more balanced revenue streams.
• The Travelers Companies, Inc. (TRV): Travelers is a key competitor in commercial and personal insurance, with a reputation for strong underwriting and risk management. While Travelers excels in U.S. property and casualty markets, it does not match AIG's global reach or life insurance offerings. AIG's diversified portfolio provides a hedge against regional or segment-specific downturns.