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TheStreet Open House

5 Insurance Stocks That Sandy Didn't Blow Away

Stock quotes in this article: AIG, ALL, TRV, CB, BRK.B, BTK.A

2. American International Group


Shares of American International Group (AIG) closed at $35.05 Monday, trading for 10 times the consensus 2013 EPS estimate of $3.51. The consensus 2014 EPS estimate is $3.95.

Of course, the AIG story has been dominated by the aftermath of the massive bailout the company received in 2008 and 2009 -- a story that is now over, as the government in December completed its sale of common shares it held in the company. AIG's stock buybacks from the government during 2012 were a major factor in the 52% return for its stock.

But the company also has multiple insurance businesses to run. The company on Dec. 7 announced that its preliminary estimate of losses from Sandy was $2.0 billion, net of reinsurance, or $1.3 billion, after tax.

During the first three quarters of 2012, AIG reported an underwriting an underwriting loss of $838 million for its Property Casualty unit. During 2011, the underwriting loss for AIG's Chartis unit was $3.2 billion.

The consensus fourth-quarter estimate is for AIG to report a loss of nine cents a share, compared to a profit of a dollar a share the previous quarter, and earnings of 82 cents a share in the fourth quarter of 2011.

Wells Fargo analyst John Hall on Thursday downgraded AIG to a "Market Perform" rating from "Outperform," saying that "while we believe that AIG shares remain attractively priced, we are less optimistic about the emergence of near-term catalysts to push the shares higher in 2013."

"Looking ahead, we see the opportunity associated with AIG shares linked to the company's capacity to improve its property-casualty results," Hall said. "These efforts include re-underwriting, re-pricing, re-tooling claims administration and reallocating capital to consumer lines. Over time, we expect AIG to be successful although we are not projecting a substantial P&C improvement over the next year."

Hall estimates that AIG will 86 cents a share in 2013.

AIG Chart AIG data by YCharts

Interested in more on American International Group? See TheStreet Ratings' report card for this stock.

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