American International Group (NYSE:AIG) and ProAssurance (NYSE:PRA) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, analyst recommendations, earnings, dividends, profitability, institutional ownership and valuation.
American International Group pays an annual dividend of $1.28 per share and has a dividend yield of 2.5%. ProAssurance pays an annual dividend of $1.24 per share and has a dividend yield of 3.2%. American International Group pays out 109.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ProAssurance pays out 83.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ProAssurance is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares American International Group and ProAssurance’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American International Group||-0.60%||2.48%||0.30%|
Risk & Volatility
American International Group has a beta of 1.4, suggesting that its share price is 40% more volatile than the S&P 500. Comparatively, ProAssurance has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500.
This is a summary of recent recommendations and price targets for American International Group and ProAssurance, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American International Group||0||3||8||0||2.73|
American International Group currently has a consensus price target of $55.09, indicating a potential upside of 6.25%. ProAssurance has a consensus price target of $44.67, indicating a potential upside of 15.93%. Given ProAssurance’s higher possible upside, analysts plainly believe ProAssurance is more favorable than American International Group.
Institutional and Insider Ownership
91.0% of American International Group shares are owned by institutional investors. Comparatively, 80.2% of ProAssurance shares are owned by institutional investors. 0.1% of American International Group shares are owned by company insiders. Comparatively, 1.7% of ProAssurance shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares American International Group and ProAssurance’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|American International Group||$47.39 billion||0.95||-$6.00 million||$1.17||44.32|
|ProAssurance||$886.03 million||2.34||$47.06 million||$1.48||26.03|
ProAssurance has lower revenue, but higher earnings than American International Group. ProAssurance is trading at a lower price-to-earnings ratio than American International Group, indicating that it is currently the more affordable of the two stocks.
ProAssurance beats American International Group on 10 of the 16 factors compared between the two stocks.
American International Group Company Profile
American International Group, Inc. provides insurance products for commercial, institutional, and individual customers in North America and internationally. 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, crop, 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.
ProAssurance Company Profile
ProAssurance Corporation, through its subsidiaries, provides property and casualty insurance, and reinsurance products in the United States. The company operates through Specialty Property and Casualty, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance, and Lloyd's Syndicate segments. It offers professional liability insurance for healthcare professionals and facilities; professional liability insurance for attorneys; liability insurance for medical technology and life sciences risks; and workers' compensation insurance for employers, groups, and associations. The company also participates in Lloyd's of London Syndicate 1729, which underwrites property and casualty insurance, and reinsurance; and Syndicate 6131 that underwrites contingency and specialty property insurance. ProAssurance Corporation markets its products through independent agencies and brokers, as well as an internal sales force. The company was founded in 1976 and is headquartered in Birmingham, Alabama.
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