American National Insurance (NASDAQ: ANAT) and American International Group (NYSE:AIG) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.

Dividends

American National Insurance pays an annual dividend of $3.28 per share and has a dividend yield of 2.7%. American International Group pays an annual dividend of $1.28 per share and has a dividend yield of 2.1%. American National Insurance pays out 42.3% of its earnings in the form of a dividend. American International Group pays out -51.0% 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. American National Insurance has increased its dividend for 3 consecutive years. American National Insurance is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

65.3% of American National Insurance shares are held by institutional investors. Comparatively, 83.5% of American International Group shares are held by institutional investors. 23.5% of American National Insurance shares are held by company insiders. Comparatively, 0.5% of American International Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares American National Insurance and American International Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
American National Insurance $3.23 billion 1.00 $181.00 million $7.75 15.54
American International Group $52.37 billion 1.06 -$849.00 million ($2.51) -24.70

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

Volatility and Risk

American National Insurance has a beta of 1.38, meaning that its stock price is 38% more volatile than the S&P 500. Comparatively, American International Group has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
American National Insurance 6.28% 2.89% 0.55%
American International Group -5.07% 3.43% 0.51%

Analyst Recommendations

This is a summary of current ratings and target prices for American National Insurance and American International Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American National Insurance 0 0 0 0 N/A
American International Group 2 5 9 0 2.44

American International Group has a consensus target price of $68.12, suggesting a potential upside of 9.87%. Given American International Group’s higher probable upside, analysts clearly believe American International Group is more favorable than American National Insurance.

American National Insurance Company Profile

American National Insurance Company is engaged in life insurance, annuities, and property and casualty insurance. The Company also offers limited health insurance. Its family of companies includes six life insurance companies, eight property and casualty insurance companies, and various non-insurance subsidiaries. Its business segments include Life, which offers products, such as Whole Life, Term Life, Universal Life, Variable Universal Life and Credit Life Insurance; Annuity, including products, such as Deferred Annuity, Single Premium Immediate Annuity and Variable Annuity; Health, including, such as Medicare Supplement, Supplemental Insurance, Stop-Loss, Credit Disability and Medical Expense; Property and Casualty, which offers products, such as Personal Lines, Commercial Lines and Credit-Related Property Insurance products, and Corporate and Other, which consists of its invested assets that are not used to support insurance activities, and non-insurance subsidiaries.

American International Group Company Profile

American International Group, Inc. is a global insurance company. The Company provides a range of property casualty insurance, life insurance, retirement products and other financial services to commercial and individual customers. Its segments include Commercial Insurance, Consumer Insurance, Other Operations and Legacy Portfolio. The Commercial Insurance segment is a provider of insurance products and services for commercial customers. It includes property casualty networks. The Consumer Insurance segment is a franchise that brings together a portfolio of retirement, life insurance and personal insurance products offered through multiple distribution networks. The Other Operations segment consists of businesses and items not attributed to its Commercial and Consumer modules or its Legacy Portfolio. The Legacy Portfolio segment includes Legacy Property and Casualty Run-Off Insurance Lines, as well as Legacy Life Insurance Run-Off Lines and Legacy Investments.

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