American International Group, Inc.

▲ Bull Case

• ◆Andersen proves himself in first 4 quarters: Q2–Q4 2026 combined ratio ≤88%; pure-play P&C narrative attracts institutional buyers; P/B re-rates from 1.11x to 1.5–1.6x; at 1.6x × FY2027E BVPS $85 = $136/share (+62%)
• ◆AOCI recovery + Core ROE convergence: As rates stabilize, unrealized AFS losses recover; GAAP equity approaches adjusted equity; GAAP ROE converges toward Core ROE 12–15%; the GAAP discount disappears; new investor base re-rates on GAAP metrics → additional P/B expansion
• ◆M&A premium: Chubb has historically paid 1.4–1.7x book for P&C acquisitions; AIG at 1.1x book is attractive; if deal materializes at $120–130/share (1.5–1.6x), shareholders realize immediate 43–55% premium

▼ Bear Case

• ◆Reserve cycle + Andersen cultural reset: $1.5–2B prior-year casualty reserve charge surfaces in H2 2026 or FY2027; Andersen reverts to premium-growth model in soft market; combined ratio widens to 92–93%; NI falls to $2.0–2.5B; stock re-rates to 1.0–1.1x book ($78–86)
• ◆Major hurricane coincides with reserve charge: 2026 CAT season produces major event ($3–5B net loss); combined ratio spikes 10–15pp; BVPS erodes $4–6/share; buybacks temporarily paused; stock drops to $70–78
• ◆NII compression accelerates: Fed cuts faster than expected; $70B AFS portfolio reinvests at 3–3.5% vs. current 5%+; NII falls below $2.5B from $4.2B FY2025; underwriting income insufficient to offset; EPS misses consensus

“Central debate: Is AIG's combined ratio improvement sustainable under Andersen, or was it entirely Zaffino's personal franchise? BULL: Andersen was the operational partner during transformation; Zaffino as Executive Chairman provides 2+ years oversight; culture improvements are embedded in systems and processes, not person-dependent. BEAR: P&C underwriting is people-dependent; new CEO inevitably creates 12–18 months disruption; soft market environment may tempt premium-growth reversion. CONSENSUS: 12 Buy / 8 Hold / 1 Sell; analyst PT ~$87 (barely above $84 trading); Street in 'show-me' mode pending Andersen's first quarters.”

• ◆Q2 2026 (Aug): Andersen's first quarter—combined ratio ≤89% & NI ≥$750M confirms transition; ≥92% or reserve charge signals risk
• ◆Pure-play P&C narrative inflection (H2 2026): Institutional rotation into pure specialty insurer; P/B re-rates from 1.11x to 1.3–1.6x
• ◆2026 CAT season (Jun–Nov): Benign season maintains thesis; major event >$3B net loss tests buyback resiliency
• ◆FY2026 capital return guidance (Nov): $4.5B+ buyback authorization for FY2027 & dividend raise signal management confidence
• ◆Chubb M&A speculation: Strategic approach at $120–130/share (1.5–1.6x book) represents 43–55% premium catalyst
• ◆BVPS trajectory (Q4 2026–Q4 2027): Path to $80–85/share enables higher P/B multiple expansion

• ◆Prior-year casualty reserve strengthening: $1–3B charge (25–30% probability) damages Andersen narrative and impairs ROE
• ◆CEO Andersen execution risk: Cultural reset under new leadership; combined ratio +3–5pp deterioration scenario in soft market
• ◆Major CAT event: 2026 hurricane >$3B net loss (25–35% annual probability) erodes BVPS $4–6/share; tests buyback commitment
• ◆NII compression: Fed rate cuts drive $4.2B NII → $2.5B; $70B AFS portfolio refinancing at 3–3.5% vs. current 5%+
• ◆Soft market premium pressure: NPE growth <2%/yr limits revenue upside despite improved combined ratio; leverage on fixed costs