Piper Jaffray analyst John Nadel reiterated an Overweight rating but trimmed estimates and his price target on American International Group (NYSE: AIG) to $77.00 (from $78.00) as core operating results fell short.

Nadel commented, "The quarter was far noisier than even we (w/ among the lowest Street estimates) expected. On an underlying core basis, results missed us driven again by a shortfall in P&C underwriting margin, among other lesser factors. Newly announced expense initiative, which should save $500-600M annually, is unfortunately already part of the targeted 3-5% annual reduction in operating expenses and thus not incremental, in our view. In short, as we largely expected, 3Q15 results are likely to add fuel to the activist argument that more dramatic action may be necessary to close the ROE gap between AIG and its peers (particularly in P&C) and thus we expect a more muted reaction in the shares than might otherwise be the case. Reiterate Overweight on valuation."

The firm lowered FY 2015 Op EPS from $4.60 to $4.24 and FY 2016 Op EPS from $5.30 to $5.20.

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Shares of American International Group closed at $63.74 yesterday.