American International Group (NYSE:AIG) and Arch Capital Group (NASDAQ:ACGL) are both large-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.
Earnings and Valuation
This table compares American International Group and Arch Capital Group’s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| American International Group | $47.39 billion | 0.96 | -$6.00 million | $1.17 | 44.75 |
| Arch Capital Group | $5.45 billion | 3.31 | $757.97 million | $2.20 | 20.25 |
Arch Capital Group has lower revenue, but higher earnings than American International Group. Arch Capital Group 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.
Profitability
This table compares American International Group and Arch Capital Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| American International Group | 3.56% | 4.17% | 0.51% |
| Arch Capital Group | 21.97% | 10.31% | 3.15% |
Analyst Ratings
This is a summary of current ratings and recommmendations for American International Group and Arch Capital Group, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| American International Group | 0 | 4 | 8 | 0 | 2.67 |
| Arch Capital Group | 0 | 4 | 5 | 0 | 2.56 |
American International Group currently has a consensus target price of $58.94, suggesting a potential upside of 12.56%. Arch Capital Group has a consensus target price of $42.79, suggesting a potential downside of 3.96%. Given American International Group’s stronger consensus rating and higher probable upside, research analysts plainly believe American International Group is more favorable than Arch Capital Group.
Risk & Volatility
American International Group has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500. Comparatively, Arch Capital Group has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500.
Insider & Institutional Ownership
91.1% of American International Group shares are held by institutional investors. Comparatively, 79.4% of Arch Capital Group shares are held by institutional investors. 0.1% of American International Group shares are held by company insiders. Comparatively, 5.2% of Arch Capital Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
About American International Group
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.
About Arch Capital Group
Arch Capital Group Ltd., together with its subsidiaries, provides property, casualty, and mortgage insurance and reinsurance products worldwide. The company's Insurance segment offers primary and excess casualty coverages; loss sensitive primary casualty insurance programs; collateral protection, debt cancellation, and service contract reimbursement products; directors' and officers' liability, errors and omissions liability, employment practices and fiduciary liability, crime, professional indemnity, and other financial related coverages; medical professional and general liability insurance coverages; and workers' compensation and umbrella liability, as well as commercial automobile and inland marine products. It also provides property, energy, marine, and aviation insurance; travel insurance; accident, disability, and medical plan insurance coverages; captive insurance programs; employers' liability insurance coverages; and contract and commercial surety coverages. This segment markets its products through a group of licensed independent retail and wholesale brokers. Its Reinsurance segment provides reinsurance for third party liability and workers' compensation exposures; marine and aviation reinsurance; surety, accident and health, workers' compensation catastrophe, agriculture, trade credit, and political risk products; reinsurance protection for catastrophic losses and commercial property risks; life reinsurance; casualty clash; and risk management solutions. This segment markets its reinsurance products through brokers, and directly to ceding companies. The company's Mortgage segment offers private mortgage insurance covering one-to-four family residential mortgages; mortgage insurance to cover previously originated residential loans; quota share reinsurance; and risk-sharing products. This segment sells its products through direct basis and through brokers to mortgage originators. The company was founded in 1995 and is based in Pembroke, Bermuda.
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