American International Group Inc. (AIG:US) posted the largest gain among big insurers as Sanford C. Bernstein & Co. said the stock presents a “once in a generation” opportunity after the firm repaid a U.S. rescue.
“With the Treasury out, and AIG a public company once again, this will be the year that the company begins to make progress on driving earnings, returns to buying back stock, and likely institutes a dividend,” Josh Stirling, an analyst at Bernstein, said in a note to investors today.
AIG rallied 1.6 percent to $37.30 at 4:01 p.m. in New York, the top increase in the 22-company Standard & Poor’s 500 Insurance Index. The advance brought this year’s gain to 5.7 percent, after a 52 percent surge (AIG:US) in 2012. New York-based AIG repaid the last of its $182.3 bailout in December, more than four years after the company’s near collapse and a U.S. rescue wiped out most of the equity value.
The insurer still trades at about half of its book value while rivals Ace Ltd. (ACE:US) and Travelers Cos. change hands today at more than the measure of assets minus liabilities.
“We see a once in a generation low-risk chance to buy a recovering franchise at a substantial discount,” wrote Stirling, who reiterated his outperform rating (AIG:US) on the company. “Investors will rotate from bidding for the now expensive quality names to scouring for value among the turnaround stories.”
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