NEW YORK (AP) – A Barclays analyst on Monday raised his ratings for American International Group Inc. and the Hartford Financial Services Group Inc., saying that both insurers could boost value for their shareholders by buying back stock at steep discounts.
Jay Gelb raised his ratings for the pair to “Overweight” from “Equal Weight.” He said that he remains concerned about AIG’s ability to significantly improve its property and casualty results, and about life insurance returns at both companies. But he expects the pair to focus on stock buybacks, which should increase both their earnings per share and asset value.
As a result, their returns on equity should increase, which should also drive their values up even if core property and casualty and life insurance profits don’t improve much, he said.
For AIG, Gelb projected $5 billion in stock buybacks for both 2014 and 2015. For the Hartford, he said the company could deliver $750 million in buybacks for the same two years.
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AIG shares rose 42 cents to $44.60 in afternoon trading, while shares of the Hartford added 9 cents to $29.75.