AIG
American International Group, Inc.
$78.25
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 16.3% below fair value
You pay
$78.25
Bear
$50.24
Fair
$93.54
Bull
$119.52
Bear
$50.24
-35.8%
ROTCE 6.5% → 0.77x TBV
Fair
$93.54
+19.5%
ROTCE 8.7% → 1.43x TBV
Bull
$119.52
+52.7%
ROTCE 10.0% → 1.83x TBV
Key Value Driver
ROTCE (8.7%) vs. cost of equity (7.3%)
Implied Market Multiple
1.17x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $87.14 from 41 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $93.54 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly