American International Group (AIG) PT Lowered to $85 at Goldman Sachs

Goldman Sachs analyst Alex Scott lowered the price target on American International Group (NYSE: AIG) to $85.00 while maintaining a Neutral rating.

The analyst comments "Following AIG 2Q25 earnings, our EPS estimates are fairly stable, with pressures on the underlying loss ratio offset by higher NII from stronger invested asset growth. We have weakened our 2025-2027 Commercial and International Commercial underlying loss ratios by ~60bps, as we consider the increasing headwind from business mix shift and an incrementally weaker rate environment than we had anticipated, particularly in International (-3% in 2Q25 vs. +2% in 1Q25). Our modeled AIG underlying loss ratios remain below the underlying loss ratios implied by our rate vs. loss trend analysis, as we adjust for favorable risk adjusted rate decreases on the company's property XOL reinsurance programs. Broadly, the 110bps/80bps deterioration in NA Commercial in 2025/2026 is driven largely by mix shift and ULAE allocation (in 2025), while the 150bps/50bps deterioration in International Commercial in 2025/2026 is driven by rate vs. trend dynamics, mix shift and ULAE allocation (in 2025). We have modestly increased our 2025 GOE ratio estimate, but leave our 2026/2027 total GI expense ratio estimates flat, as we consider management guidance and favorable dynamics in the policy acquisition ratio, related to AIG's new reinsurance structures. The GI Interest & Dividend yield beat our estimate in the quarter, though timing impacts flattered the result, and we expect floating rates will be a continued downward pressure, resulting in our largely unchanged yield estimate. On the other hand, we view the stronger-than expected invested asset growth as more sustainable, particularly given the meaningful growth in casualty premiums. As we consider our largely stable estimates, against a modestly greater income weighting to NII and a broader de-rating of insurance carriers, we maintain our Neutral rating and decrease our price target by 4% to $85 (11% total return)."

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