UPDATE - Barclays Initiates Coverage on American International Group (AIG) with an Equalweight; Reasonably Valued

UPDATE - Barclays initiates coverage on American International Group (NYSE: AIG) with an Equalweight. PT $31.

Barclays analyst said, "AIG is focused on earnings and ROE recovery. By 2012, we estimate AIG could generate a 7% operating ROE, which we anticipate will be below life insurer and P&C insurer peers. Management's plan is to deliver a mid-teens operating EPS growth and an ROE of over 10% by 2015, which appears optimistic to us based on a mature U.S. life insurance market and a competitive P&C market."

"We believe AIG shares are now reasonably valued...Our EPS estimates are $3.35 in 2011, which take into account one-time gains and elevated catastrophe losses, and $3.25 in 2012, reflecting normalized earning power. We anticipate AIG could begin share buybacks in 2013, which could be a positive catalyst, and the company could seek to monetize its ILFC aircraft leasing operation. AIG's recent $9bn re-IPO resulted in the U.S. Treasury reducing its ownership stake to 77%, and we anticipate the Treasury will sell more AIG shares over time."

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