AIG American International Group
P&C pure-play near book; ROE roughly equals cost of equity, so fair value is about $75-84.
The story
AIG is now a focused commercial and international P&C underwriter after deconsolidating Corebridge, trading at about 0.96x book ($78.66/share). Underwriting margins have improved: the operating margin held near 16% for two years, though reported ROE (7.2%) is still weighed down by excess capital, Corebridge sell-down noise and catastrophe losses. The balance sheet is conservatively reserved and well capitalized. The commercial P&C pricing cycle is past its peak but still adequate.
Nothing material has changed since the 2026-09-01 take, so I'm keeping the drivers. A 9.5% normalized ROE sits between the 7.2% trailing figure and management's 10%+ core target, and allows for softening commercial pricing. With beta at 0.95 the cost of equity is about 9.5%, so returns roughly equal the cost of capital and value should sit near book. Heavy buybacks keep book growth modest even as earnings are retained.
Value drivers
| Return on equity (normalized) | 9.5% |
| Book-value growth (Y1) | 3.0% |
| Terminal book growth | 3.5% |
| Beta | 0.95 |
| Failure probability | 1.5% |
| Cost of equity | 9.5% |
Valuation bridge
| PV of excess returns | -34.93M |
| PV of terminal excess | -45.57M |
| Equity value | 40.44B |
| ÷ shares → per share | $77.34 |
Projected excess returns on equity
| Yr | Book equity | ROE | Excess return | PV |
|---|---|---|---|---|
| 1 | 41.14B | 9.5% | -4.94M | -4.51M |
| 2 | 42.37B | 9.5% | -5.08M | -4.24M |
| 3 | 43.67B | 9.5% | -5.24M | -3.99M |
| 4 | 45.03B | 9.5% | -5.40M | -3.76M |
| 5 | 46.45B | 9.5% | -5.57M | -3.54M |
| 6 | 47.95B | 9.5% | -5.75M | -3.34M |
| 7 | 49.52B | 9.5% | -5.94M | -3.15M |
| 8 | 51.17B | 9.5% | -6.14M | -2.97M |
| 9 | 52.91B | 9.5% | -6.35M | -2.80M |
| 10 | 54.73B | 9.5% | -6.57M | -2.65M |
Key risks
- Softening commercial and excess casualty pricing compresses underwriting margins
- Adverse reserve development on social-inflation-exposed casualty lines
- Elevated catastrophe losses and higher reinsurance costs
Catalysts
- Full Corebridge exit releasing capital for buybacks and bolt-on M&A
- Core operating ROE reaching the 10%+ target as expense savings land