Reviewing American International Group (AIG) & Progressive (PGR)

American International Group (NYSE:AIG) and Progressive (NYSE:PGR) are both large-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.

Earnings & Valuation

This table compares American International Group and Progressive’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American International Group $49.52 billion 0.87 -$6.08 billion $2.40 20.25
Progressive $26.84 billion 1.56 $1.59 billion $2.63 27.30

Progressive has lower revenue, but higher earnings than American International Group. American International Group is trading at a lower price-to-earnings ratio than Progressive, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

89.3% of American International Group shares are owned by institutional investors. Comparatively, 80.3% of Progressive shares are owned by institutional investors. 0.1% of American International Group shares are owned by company insiders. Comparatively, 0.7% of Progressive shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

American International Group pays an annual dividend of $1.28 per share and has a dividend yield of 2.6%. Progressive pays an annual dividend of $1.12 per share and has a dividend yield of 1.6%. American International Group pays out 53.3% of its earnings in the form of a dividend. Progressive pays out 42.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Ratings

This is a breakdown of current ratings and target prices for American International Group and Progressive, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American International Group 0 4 9 0 2.69
Progressive 1 5 5 1 2.50

American International Group currently has a consensus price target of $63.61, suggesting a potential upside of 30.85%. Progressive has a consensus price target of $68.62, suggesting a potential downside of 4.44%. Given American International Group’s stronger consensus rating and higher probable upside, research analysts clearly believe American International Group is more favorable than Progressive.

Profitability

This table compares American International Group and Progressive’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American International Group -13.67% 2.03% 0.27%
Progressive 7.57% 21.84% 5.24%

Risk and Volatility

American International Group has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500. Comparatively, Progressive has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500.

Summary

Progressive beats American International Group on 10 of the 17 factors compared between the two stocks.

About American International Group

American International Group, Inc. provides insurance products for commercial, institutional, and individual customers primarily in the United States, Europe, and Japan. The company's General Insurance segment offers general liability, environmental, commercial automobile liability, workers' compensation, excess casualty, and crisis management insurance products, as well as various risk-sharing and other customized structured programs; commercial, industrial, and energy-related property insurance; and aerospace, political risk, trade credit, portfolio solutions, surety, and marine insurance. It also provides professional liability insurance products for a range of businesses and risks, including directors and officer's liability, mergers and acquisitions, fidelity, employment practices, fiduciary liability, cyber risk, kidnap and ransom, and errors and omissions insurance. In addition, this segment offers personal auto and property insurance, voluntary and sponsor-paid personal accident, and supplemental health products; extended warranty insurance products; and travel insurance products. Its Life and Retirement segment offers variable annuities, fixed index and fixed annuities, and retail mutual funds; group mutual funds, fixed annuities, and variable annuities, as well as individual annuity and investment products, and financial planning and advisory services; and term life and universal life insurance. This segment also provides stable value wrap products, and structured settlement and pension risk transfer annuities; and corporate- and bank-owned life insurance and guaranteed investment contracts. This segment sells its products through independent marketing organizations, independent insurance agents, financial advisors, direct marketing, banks, wirehouses, and broker-dealers. The company's Legacy Portfolio segment offers legacy insurance products. American International Group, Inc. was founded in 1919 and is headquartered in New York, New York.

About Progressive

The Progressive Corporation, through its subsidiaries, provides personal and commercial auto insurance, residential property insurance, and other specialty property-casualty insurance and related services primarily in the United States. Its Personal Lines segment writes insurance for personal autos, and recreational and other vehicles. This segment's products include personal auto insurance; and special lines products, including insurance for motorcycles, ATVs, RVs, watercrafts, and snowmobiles. The company's Commercial Lines segment provides primary liability, physical damage, and other auto-related insurance for autos, vans, pick-up trucks, and dump trucks used by small businesses; tractors, trailers, and straight trucks primarily used by regional general freight and expeditor-type businesses, and non-fleet long-haul operators; dump trucks, log trucks, and garbage trucks used by dirt, sand and gravel, logging, and coal-type businesses; tow trucks and wreckers used in towing services and gas/service station businesses; and non-fleet taxis, black-car services, and airport taxis. Its Property segment provides residential property insurance for homeowners, other property owners, and renters, as well as offers personal umbrella insurance, and primary and excess flood insurance. The company also offers policy issuance and claims adjusting services; home, condominium, renters, and other insurance; and general liability and business owner's policies, and workers' compensation insurance. In addition, it offers reinsurance services. The Progressive Corporation sells its products and services through independent insurance agencies, as well as directly on Internet, and mobile devices, and over the phone. The company was founded in 1937 and is headquartered in Mayfield Village, Ohio.

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