American International Group (NYSE:AIG) versus Assured Guaranty (NYSE:AGO) Head to Head Contrast

American International Group (NYSE:AIG) and Assured Guaranty (NYSE:AGO) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, risk, valuation, earnings, analyst recommendations, institutional ownership and profitability.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for American International Group and Assured Guaranty, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American International Group	0	12	7	2	2.52
Assured Guaranty	0	2	2	0	2.50

American International Group presently has a consensus target price of $88.81, indicating a potential upside of 4.68%. Assured Guaranty has a consensus target price of $101.00, indicating a potential upside of 12.01%. Given Assured Guaranty’s higher probable upside, analysts plainly believe Assured Guaranty is more favorable than American International Group.

Dividends

American International Group pays an annual dividend of $1.80 per share and has a dividend yield of 2.1%. Assured Guaranty pays an annual dividend of $1.36 per share and has a dividend yield of 1.5%. American International Group pays out 32.7% of its earnings in the form of a dividend. Assured Guaranty pays out 16.9% 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 International Group has increased its dividend for 3 consecutive years and Assured Guaranty has increased its dividend for 7 consecutive years.

Institutional and Insider Ownership

90.6% of American International Group shares are held by institutional investors. Comparatively, 92.2% of Assured Guaranty shares are held by institutional investors. 0.6% of American International Group shares are held by company insiders. Comparatively, 5.1% of Assured Guaranty shares are held 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.

Volatility and Risk

American International Group has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500. Comparatively, Assured Guaranty has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
American International Group	11.89%	9.09%	2.32%
Assured Guaranty	40.65%	7.09%	3.35%

Valuation & Earnings

This table compares American International Group and Assured Guaranty”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American International Group	$27.25 billion	1.68	-$1.40 billion	$5.50	15.43
Assured Guaranty	$872.00 million	4.77	$376.00 million	$8.06	11.19

Assured Guaranty has lower revenue, but higher earnings than American International Group. Assured Guaranty 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.

Summary

Assured Guaranty beats American International Group on 11 of the 18 factors compared between the two stocks.

About American International Group

American International Group, Inc. offers insurance products for commercial, institutional, and individual customers in North America and internationally. It operates through three segments: General Insurance, Life and Retirement, and Other Operations. The General Insurance segment provides commercial and industrial property insurance, including business interruption and package insurance that cover exposure to made and natural disasters; general liability, environmental, commercial automobile liability, workers’ compensation, excess casualty, and crisis management insurance products; and professional liability insurance. This segment offers marine, energy-related property insurance, aviation, political risk, trade credit, trade finance, and portfolio solutions, as well as operates reinsurance business; voluntary and sponsor-paid personal accident, and supplemental health products; and personal auto and personal property insurance. Its Life and Retirement segment offers individual retirement products, including variable, fixed index, and fixed annuities, as well as retail mutual funds; group retirement products comprising record-keeping, plan administrative and compliance services, financial planning, and advisory solutions; life insurance, including term and universal life insurance; and institutional markets products, which includes wrap products, structured settlement, pension risk transfer annuities, corporate and bank-owned life insurance, high net worth, and guaranteed investment contract products. It distributes its products through a network of brokers, agents, advisors, banks, and other distributors. The company was founded in 1919 and is headquartered in New York, New York.

About Assured Guaranty

Assured Guaranty Ltd., together with its subsidiaries, provides credit protection products to public finance, infrastructure, and structured finance markets in the United States and internationally. It operates through two segments: Insurance and Asset Management. The company offers financial guaranty insurance that protects holders of debt instruments and other monetary obligations from defaults in scheduled payments. It insures and reinsures various debt obligations, including bonds issued by the United States state governmental authorities; and notes issued to finance infrastructure projects. In addition, the company insures and reinsures various the U.S. public finance obligations, such as general obligation, tax-backed, municipal utility, transportation, healthcare, higher education, infrastructure, housing revenue, investor-owned utility, renewable energy, and other public finance bonds. Further, the company involved in insuring and reinsuring of non-U.S. public finance obligations comprising regulated utilities, infrastructure finance, sovereign and sub-sovereign, renewable energy bonds, pooled infrastructure, and other public finance obligations; and the U.S. and non-U.S. Structured finance obligations, including residential mortgage-backed securities, life insurance transactions, consumer receivables securities, subscription finance facilities, pooled corporate obligations, and financial products. Additionally, it offers specialty business, such as real estate properties, insurance securitizations, and aircraft residual value insurance (RVI) transactions; and asset management services comprising investment advisory services. It markets its financial guaranty insurance directly to issuers and underwriters of public finance and structured finance securities, as well as to investors in such obligations. Assured Guaranty Ltd. was incorporated in 2003 and is headquartered in Hamilton, Bermuda.