Story updated at 9:55 a.m. to reflect market activity.
Shares of AIG fell 1.9% to $49.59 in morning trading.
The bank lowered its price target for the insurance provider to $55 from $58. The downgrade is due to the company facing high costs according to analyst Joshua Shanker."After making significant improvements in its core operations, elevated expenses continue to impose a ceiling on the profitability of the property and casualty business," Shanker wrote. "Management indicates that Fuji unit integration costs will keep expenses high through 2014, which suggests that core ROE may stagnate at around 6% for the foreseeable future. While we believe cash flow will ultimately exceed core and GAAP EPS, we believe incremental buyers will need to see additional combined ratio improvement to be motivated to purchase AIG stock. Hold." Must read: Warren Buffett's 10 Favorite Stocks STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. AIG data by YCharts STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.