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) --



shares are up 47% this year, but the insurer remains "the best value and most compelling long-term opportunity in our space," writes Bernstein Research analyst Josh Stirling in a report published Monday.

In addition to AIG, which he rates "outperform," Stirling covers

Allstate Corp.



ACE Ltd.



Chubb Corp.

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Travelers Cos.


, among other insurers.

Stirling argues a pricing slowdown in the property and casualty (P&C) insurance market will "make the execution of AIG's margin recovery more challenging," however, he contends "the firm's margin gap to peers is substantial, and with transformational initiatives underway to close the gap, the company should be able to drive an earnings recovery in P&C even as tailwinds from pricing wane."

In addition, more than half AIG's earnings and a third of its capital is committed to the life insurance business, "which unlike P&C, materially benefits from rising

interest rates," Stirling writes.

Shares of AIG, which reports earnings Thursday, were down 1% in early trading on Monday to $51.41. Stirling has a $60 price target on the stock.


Written by Dan Freed in New York


Follow @dan_freed

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.