BMO Capital analyst Charles Sebaski raised estimates and his price target on Outperform-rated AIG to $53 following Q1 results, that at $1.34 handily beat the consensus of $0.87 and his estimate of $0.89.
The analyst notes margins improvement in both the P&C and Life divisions. P&C net premiums of $8.4 billion were below the firm's forecast of $9.0 billion, although underwriting improved 440bp. SunAmerica had its best quarter in three years with $1.4 billion in pretax operating profit compared to our $1.2 billion estimate. In addition, long-term debt was reduced $2.1 billion, lowering interest expense by $165mm annually.
Sebaski said, "We expect these strong results to provide investors with additional comfort that AIG’s operational plan of 1) improving core results, 2) improving ROE and 3) reengaging in capital management activities is a viable one. Consequently, we are increasing our 2013 and 2014 EPS estimates."
The firm raised EPS estimates for 2013 and 2014 to $4.30 and $4.75, respectively, versus Street consensus of $3.41 and $3.98, respectively.