This American International Analyst Is No Longer Bullish On Soft Pricing Power

Shares of American International Group Inc AIG have been in focus due to the impact of Hurricane Helene on insurers.

Conversations with corporate risk managers suggest that pricing power among insurers in the large employer marketplace remains “soft,” according to BMO Capital Markets.

Analyst Michael Zaremski downgraded the rating for American International Group from Outperform to Market Perform, while reducing the price target from $90 to $84.

The American International Group Thesis: Most large employers do not expect their property insurance and casualty insurance pricing costs to accelerate meaningfully in the next six months, Zaremski said in the downgrade note.

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"Given our viewpoint that soft-market conditions persist in the near term, we are lowering our 2025 and 2026 EPS estimate run-rate for AIG by ~2%, driven by higher/ worse underlying loss ratios in North America and International Commercial," he added.

The soft pricing power is likely to exert pressure on profit margins for insurers that have higher exposure in the large employer marketplace, the analyst stated. AIG’s 2025 premium mix is about 72% commercial lines, “which we estimate is predominantly large-account weighted," he further wrote.

AIG Price Action: Shares of American International Group had declined by 0.12% to $77.72 at the time of publication on Tuesday.

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