Head-To-Head Analysis: National General Holdings Corp (NASDAQ:NGHC) & American International Group (AIG)

American International Group (NYSE: AIG) and National General Holdings Corp (NASDAQ:NGHC) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, risk, profitability and valuation.

Dividends

American International Group pays an annual dividend of $1.28 per share and has a dividend yield of 2.1%. National General Holdings Corp pays an annual dividend of $0.16 per share and has a dividend yield of 0.9%. American International Group pays out -711.1% of its earnings in the form of a dividend. National General Holdings Corp pays out 22.2% 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. National General Holdings Corp has increased its dividend for 3 consecutive years. American International Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

87.8% of American International Group shares are owned by institutional investors. Comparatively, 53.2% of National General Holdings Corp shares are owned by institutional investors. 0.5% of American International Group shares are owned by company insiders. Comparatively, 3.4% of National General Holdings Corp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

American International Group has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500. Comparatively, National General Holdings Corp has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for American International Group and National General Holdings Corp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American International Group 1 3 9 0 2.62
National General Holdings Corp 0 1 2 0 2.67

American International Group currently has a consensus target price of $68.90, indicating a potential upside of 12.33%. National General Holdings Corp has a consensus target price of $25.00, indicating a potential upside of 38.58%. Given National General Holdings Corp’s stronger consensus rating and higher possible upside, analysts clearly believe National General Holdings Corp is more favorable than American International Group.

Profitability

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

Net Margins Return on Equity Return on Assets
American International Group -0.53% 6.06% 0.95%
National General Holdings Corp 2.13% 7.80% 1.61%

Valuation & Earnings

This table compares American International Group and National General Holdings Corp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American International Group $49.87 billion 1.11 $4.99 billion ($0.18) -340.76
National General Holdings Corp $4.15 billion 0.46 $249.48 million $0.72 25.06

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

Summary

National General Holdings Corp beats American International Group on 10 of the 17 factors compared between the two stocks.

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.

National General Holdings Corp Company Profile

National General Holdings Corp. is a specialty personal lines insurance holding company. Through its subsidiaries, the Company provides a range of insurance products, including personal and commercial automobile, homeowners, umbrella, recreational vehicle, supplemental health, lender-placed and other niche products. It operates through two segments: Property and Casualty (P&C) and Accident and Health (A&H). Its P&C segment offers its P&C insurance products through a network of agents, a number of affinity partners and through direct-response marketing programs. Its A&H segment provides accident and non-major medical health insurance products targeting its existing P&C policyholders and the anticipated market of employed persons who are uninsured or underinsured. The P&C segment operates its business through three distribution channels: agency, affinity and direct. The A&H segment provides supplemental accident and health insurance products.

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