American International Group, Inc.

AI-generated fair value estimate for this company.

Method: Excess-return (Gordon-growth-on-book) model for an insurer. Inputs: BVPS = $77.39 (total shareholders' equity $40.6B / 522.89M shares); normalized sustainable ROE = 10.5%; cost of equity = 9.5% (CAPM: ~4.2% risk-free rate + ~1.0 beta x ~5.5% equity risk premium); terminal/long-run growth = 4%. P/B = (ROE - g)/(COE - g) = (0.105 - 0.04)/(0.095 - 0.04) = 1.182x. Value/share = 1.182 x $77.39 = $91.50. Market cap $38.81B, price $74.22, shares out 522.89M, TTM revenue $26.74B, TTM net income $2.97B, P/B 0.96x.

Reasoning: For a large, diversified global P&C/life insurer, free cash flow is not an economically meaningful independent driver - value flows through underwriting float, reserves and the investment portfolio, which are best captured by how much ROE a dollar of book value generates versus the cost of equity capital. A Gordon-growth excess-return-on-book model (standard insurer valuation approach) is therefore more appropriate than a naive unlevered FCF DCF.