American International Group (AIG, Financial) has been a long-term holding across other Oakmark Funds. As we referenced above, the market was painting financials with too broad a brush, and AIG is a great example. There are two primary businesses at AIG: commercial insurance (80% of our estimate of value) and life insurance and annuities (20% of our estimate of value). The latter, now named Corebridge, trades publicly, and AIG owns ~78% of the shares. We expect that AIG will reduce its ownership at appropriate prices over time, leaving the commercial insurance operations on its own. Under the strong leadership of CEO Peter Zaffino, underwriting profits in the commercial insurance operations have improved $7B since 2016 and are now competitive with the broader industry, though AIG’s valuation is not. At $50, AIG sells for less than 8x this year’s consensus earnings and 57% of our estimate of economic tangible book value.
From David Herro (Trades, Portfolio)'s Oakmark Global Fund first-quarter 2023 commentary.
