AIG To Redeem $1.5B In 2021 Notes; Street Is Cautiously Optimistic

American International Group on Dec. 30 announced that it plans to redeem its outstanding 3.300% notes due 2021 on Feb. 1, 2021.

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AIG (AIG) will pay a redemption price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest (excluding the redemption date) to the registered holders of the notes on the redemption date.

As of Dec. 30, 2020, the global insurer had $1.5 billion in aggregate principal amount of the notes outstanding.

On Dec. 18, Piper Sandler analyst Paul Newsome raised the price target on the stock from $42 to $50 and reiterated a Buy rating. The new price target implies 33.3% upside potential.

Following the company’s Q3 conference call on Nov. 6, Wells Fargo analyst Elyse Greenspan raised the stock’s price target to $40 from $39 and reiterated a Buy rating.

AIG’s Q3 conference focused on the separation of its life business, its margin outlook for General Insurance, AIG 200, and pricing color. The 2020 EPS estimate was raised to $2.55 from $2.15 to account for the Q3 beat, combined with better forward margins. The 2021 EPS estimate was increased to $4.35 from $4.30 and the 2022 estimate was lifte $5.15 (from $5.05) to reflect better margins in General Insurance.

Overall, the rest of the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 4 Buys and 4 Holds. (See AIG stock analysis on TipRanks)

With shares, down 27% year-to-date, the average price target stands at $41.13 and implies 9.6% upside potential to current levels.