American International Group Incorporation is a company based in the United States. The company sells insurance, risk management, and investment products and services around the world. The company sells life, general liability, workers compensation, and many others. The company was founded in 1919.
Why You Should?
- AIG is a great reopening play in an investor’s portfolio. The company has been crushed by the pandemic as the stock market crashed and the amount of insurance that it needed to pay out rose. However, once this pandemic is over, the company will be able to see rising demands for its services.
- The company sells a wide range of services which has helped it remain stable through tougher economic times. From life and workers compensation insurance to investment portfolio services, the insurance juggernaut continues to sell a wide range of products to both individuals and large entities around the world. This has benefited the company and its investors.
Why You Should Not?
- AIG faces tough competition in the insurance industry. Some of these competitors include Freddie Mac, MetLife, Berkshire Hathaway, and many others. This competition has hurt the company in the past and might continue to hurt the company and its investors in the future.
- AIG is a riskier investment than some might think. The company’s operating results are impacted by how much the company needs to pay out to its customers in insurance. In 2020 (for example), the company has had to pay out a lot more due to the impacts of the pandemic and other natural disasters. This has hurt the company and its investors in the past.
- AIG will see some negative impacts under a Biden administration as the Democrats want to crack down on some insurance giants. They want to do more to protect the consumer and further increase regulation on companies like AIG (something that will hurt growth). If regulation is passed, then it will hurt the company and its investors.
- The COVID-19 pandemic has hurt the company’s operational results. They have had to pay out a lot more for things like workers’ compensation, life, and other liability insurance packages for their customers. Other losses in derivatives and other products also hurt the company and its investors in 2020.
- Over the past couple of years, the company has reported extremely lackluster financial results due to the reasons mentioned before. This has caused the stock price to stagnate and not grow with the rest of the market. Until AIG changes this performance, it will continue to hurt them and their investors. The graph below contains the operating results for the company over the past financial years. You can clearly see that the company has reported a loss for some of the years and has also not been growing its revenues.
I don’t think that AIG is a good investment option due to negative impacts from the pandemic, lackluster performances in the past, tough competition, a higher risk factor, as well as a negative political background. However, the company is still a decent reopening play and can leverage its wide range of products and services as well.