Overview
Keefe, Bruyette & Woods has adjusted its price target on American International Group to $97.00, up from $96.00, while keeping an Outperform rating on the insurer. The change follows AIG's fourth-quarter 2025 financial release and reflects KBW's revised expectations for revenue components and reserve dynamics.
Drivers behind the target move
KBW cited three principal drivers for the updated view: anticipated faster growth in premiums, an uptick in net investment income, and larger-than-expected reserve releases. Those factors led the firm to raise its earnings-per-share projections for the next two calendar years.
Updated earnings projections
Under KBW's revised model, AIG's EPS is forecast at $7.95 for 2026, up from a prior projection of $7.90. For 2027, the firm now expects EPS of $9.20, compared with its earlier $9.10 estimate. The new $97 price objective equates to a multiple of 10.5 times KBW's 2027 EPS forecast.
Current market metrics
At the time of KBW's note, AIG trades at a price-to-earnings ratio of 14.14 and yields 2.4% on its dividend. The company has recorded dividend growth of 12.5% over the last twelve months. Separately, a Fair Value assessment indicates that AIG is slightly overvalued at current market levels.
Offsets and cautions highlighted by KBW
KBW also flagged areas of pressure that will partially offset the favorable drivers. The analyst firm pointed to elevated underwriting expenses and rising costs within AIG's Other Operations segment. Despite those headwinds, KBW continues to expect that expanding underwriting income combined with improving investment income will be the primary forces behind projected share-price outperformance over the next 12 months.
Recent results that informed the view
American International Group reported fourth-quarter 2025 earnings per share of $1.96, beating the consensus estimate of $1.90. Revenue for the period came in at $6.97 billion, above the $6.91 billion expectation. Those results were central to analysts' recalibrations following the earnings release.
Outlook and market reaction
KBW's adjustment is modest in absolute terms but reflects confidence in the insurer's ability to drive both underwriting and investment income growth despite cost pressures. The firm still sees upside for shares based on its 2027 earnings forecast and the applied multiple.
Conclusion
In sum, KBW's move to raise AIG's target to $97 incorporates modest upward revisions to 2026 and 2027 EPS tied to premium expansion, investment income gains and reserve releases, while recognizing offsetting expense trends in underwriting and Other Operations. The firm maintains an Outperform stance and expects the combination of underwriting and investment income growth to propel share performance over the next year.