After the last economic crisis, investors have found it hard to trust insurance companies. Some said they were too big to fail, while others, too big to ignore. Either way, we will look into some of the main firms in the industry, American International Group plc (NYSE:AIG), Metlife Inc (NYSE:MET), and Hartford Financial Services Group Inc (NYSE:HIG), and analyze the main pros and cons that they offer for investors.
A stock in recovery
American International Group plc (NYSE:AIG) is slowly recuperating after the business disaster that led to the federal government bailout. In order to reconstruct the firm, explained Morningstar’s Jim Ryan, a new management has been selling assets that are not indispensable and considerably limiting risky investments, resulting American International Group plc (NYSE:AIG)’s return to common stockholders.
Analysts recommend caution regarding this company, and for reasons that appear quite clear. Nevertheless, American International Group plc (NYSE:AIG) is not a “sell,” but more a “hold” kind of situation. Zack’s estimates short term returns to be somewhere around 10% (annualized) and the stock price to reach $41.00, up 6% within one year. Meanwhile, fiscal 2012’s fourth quarter delivered higher earnings than consensus estimates, while stock price rose 28% over the last 12 months, and 13% in the last 100 days.
Under these circumstances, however, some of the main investment websites still recommend American International Group plc (NYSE:AIG). CNNMoney analyst, Paul La Monica, compliments CEO, Robert Benmosche, and declares he is confident about past and future results, although a full recovery to a pre-2009 point seems highly unlikely. Morningstar also assures that the company is undervalued and due to increase investors’ value, as the management team is extremely “committed to increasing profitability through operational improvements and a shift in business mix. American International Group plc (NYSE:AIG) lost its way by relying on extremely risky financial bets that obfuscated weak performance in core operations, and current management has put an end to those activities.” Taking this into account, paying 26.2 times P/E could be worth it.