AIG increases value for its shareholders thru buy backs and dividends. The compounded annual growth rate was 6,15% last 3 years. AIG's goal is to grow its book value by 10% a year. ROE target long term is 10%.
What is this business worth?
Tangible book value per share is currently at 79,4 USD/share. If they can create value of 10% a year thru buy backs and dividends, book value should be met, leaving an upside of 49%. Further value can be created if the company is to be split up, with Icahn as the main driver.
Earnings power value:
Earnings have to come up to a 10% ROE to justify book value. Right now a 3% downside looking at the 5yEPV.
Disclosure: The author had no position when this post/analysis was written.