American International Group, Inc.’s AIG UK arm, namely AIG Life Limited recently closed the acquisition of Ellipse from Munich Re. However, terms of the transaction have been kept under wraps.
Ellipse is a specialty provider of group life, critical illness and income protection in the United Kingdom. The acquirer believes that Ellipse’s expertise in group protection and advanced technology will be in sync with its current business model in the United Kingdom.
With the closure of this transaction, AIG Life will now distribute group as well as individual protection insurance products to United Kingdom-based customers via financial intermediaries, collaborations and employee benefits consultants. This buyout would help AIG Life to establish an even stronger presence in the United Kingdom market. The transaction is likely to strengthen AIG’s position in Life & Retirement businesses.
Over the past few years, AIG has been on a buyout spree to boost its portfolio and penetrate into new markets. Recently, it acquired Validus Holdings, Ltd. and Glatfelter Insurance Group, which is likely to enhance its global General Insurance business. The company’s CEO Brian Duperreault, appointed last year, has made a significant shift in its capital utilization and now expects to utilize capital for possible buyouts in the international markets, bolstering the company’s personal and life lines segments plus investing in the domestic middle market as opposed to its hitherto usage of capital resource for share repurchases. This strategy should lead to long-term growth via business expansion.
Shares of this Zacks Rank #5 (Strong Sell) company have lost 33.8% in a year’s time, compared with the industry’s decline of 22.2%. The company’s shares have been suffering over the past few years on account of declining revenues and weakness in the General Insurance segment. However, growth initiatives taken by the company should help the shares bounce back.
Stocks to Consider
Investors looking for some better-ranked stocks in the same industry may consider options like Cigna Corporation CI, MetLife, Inc. MET and MGIC Investment Corporation MTG, each carrying a Zacks Rank #2 (Buy).
Cigna offers insurance plus related products and services in the United States and internationally. It came up with average trailing four-quarter positive surprise of 13.46%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MetLife offers services in the insurance, annuities, employee benefits and asset management businesses. The stock delivered average beat of nearly 9.67% in the last four reported quarters.
MGIC Investment Corporation provides private mortgage insurance and ancillary services in the United States. The company pulled off encouraging average earnings surprise of 34.32% over the preceding four reported quarters.
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