AIG Earnings Call Signals Profitable Growth Momentum

American International Group, Inc. ((AIG)) has held its Q4 earnings call. Read on for the main highlights of the call.

American International Group, Inc. struck an upbeat tone on its latest earnings call, spotlighting broad-based gains in underwriting, investment income and capital returns that pushed returns on equity above 10% for the first time in more than a decade. Management acknowledged pricing and volume pressure in select North American and personal lines, but framed these as manageable headwinds against a backdrop of stronger profitability and clear growth initiatives.

Strong Earnings Growth

AIG reported Q4 adjusted after-tax income of $1.96 per diluted share, a 51% jump from a year earlier, while full-year earnings climbed 43% to $7.09 per share. Adjusted after-tax income reached $4.0 billion for 2025, up 24% year over year, underscoring a step-change in earnings power as underwriting and investment results improved in tandem.

Robust Underwriting Results

Underwriting income surged to $670 million in Q4, up 48% year over year, and totaled $2.3 billion for the full year, the first time since 2008 AIG has topped $2 billion excluding divested units. The accident-year combined ratio (as adjusted) came in at 88.9% in the quarter, marking a 17th straight sub-90% quarter, while the full-year accident-year ratio was 88.3% and the calendar-year figure a disciplined 90.1%.

Premium Growth and New Business Momentum

Global commercial net premiums written grew 3% in Q4 and reached $17.4 billion for 2025, up 3% year over year, or 4% after prior-year closeout adjustments. New business was a key driver, with global commercial new business up 9% for the year, international up 10% and global specialty rising 15%, including a 14% international new-business increase in Q4.

Expense and ROE Improvement

The expense ratio improved to 31.1% for 2025, a 90 basis point decline from the prior year, as management continues to push toward a sub-30% target by 2027. Core operating ROE advanced to 11.1%, rising 200 basis points year over year and marking AIG’s first adjusted ROE above 10% in more than ten years, signaling healthier and more sustainable profitability.

Improved Investment Income and Yields

Net investment income on an adjusted pre-tax income basis rose 8% to $3.8 billion for the year, with Q4 APTI investment income up 9% to $954 million. Core fixed income was a standout, contributing $3.1 billion, up 17% year over year, as average new-money yields climbed to about 4.59% in Q4, roughly 68 basis points higher than a year earlier.

Strong Capital Returns and Balance Sheet Position

AIG returned $6.8 billion to shareholders in 2025, including $5.8 billion of share repurchases and $1.0 billion in dividends, and also lifted its quarterly dividend by 12.5%. The balance sheet remains conservative, with $9 billion of debt and an 18% debt-to-total-capital ratio, while book value per share rose 9% to $76.44 and adjusted tangible book value per share increased 4% to $70.37.

Favorable Reinsurance Renewals

The company’s January 1 reinsurance renewals were a clear positive, delivering a weighted average risk-adjusted rate decrease of more than 15% on property catastrophe covers, unlocking substantial savings. AIG also enhanced its attachment and return-period profile, maintained attractive ceding commissions in the low 30s on casualty quota share, and added the Everest portfolio on AIG pricing without increasing nominal costs.

Strategic Transactions and Partnerships

Management highlighted strategic deals designed to add fee income, diversify risk and support growth, including a roughly 35% equity interest in Convex, a 9.9% stake in Onyx and a growing quota share that begins at 7.5% in 2026. AIG also launched Syndicate 2479 with Amwins and Blackstone, providing $300 million of capacity, and reset the Everest renewal-rights purchase price to $270 million with renewable premium near $1.8 billion and early conversion retention of about 75%.

GenAI and Digital Progress

AIG is leaning on generative AI to drive underwriting efficiency, expanding its “Underwriting Assist” tool to seven additional lines, including Lexington, which helped boost Lexington submissions 26% year over year. The company has already processed more than 370,000 submissions toward a 500,000 target by 2030 and is using GenAI to speed Everest conversion and enhance underwriting and analytics in its special purpose vehicles.

2026 Growth and Capital Guidance

Looking ahead, AIG expects low-to-mid-teens net premiums written growth in general insurance for 2026 and plans to repurchase at least $1 billion of shares, with more buybacks likely if it further monetizes its Corbridge stake. Management sees near-term earnings accretion from the Convex and Everest transactions, sizable reinsurance savings, expanded SPV capacity and broader GenAI deployment as key levers to meet or exceed its 2027 margin and expense-ratio targets.

Pressure in North America Property

Not all segments are moving in the same direction, with North America retail property contracting about 8% for the year as AIG deliberately pulled back risk in a competitive market. Pricing in this business fell roughly 10% for the full year, while excess and surplus property pricing dropped about 13%, reflecting persistent pricing pressure that weighs on top-line growth in the segment.

Global Personal Headwinds from Reinsurance Structure

Global personal lines continued to face structural headwinds, with net premiums written contracting about 3% for the year and falling around 6% in Q4, largely due to higher ceded premiums under a high-net-worth quota share treaty. Even with some improvement, the global personal accident-year combined ratio (as adjusted) remained elevated at about 95.3%, keeping profitability in this book below the group average.

Loss Ratio and Business-Mix Shifts

The Q4 accident-year loss ratio rose to 56.8%, an increase of 100 basis points from the prior year, or 70 basis points excluding travel, reflecting both mix and market dynamics. North America commercial’s accident-year combined ratio climbed to 87.2% and international commercial’s to 85.9%, with higher-loss-ratio casualty, captives and energy exposures contributing to the shift.

Expense Ratio Still Above Target and One-time Allocations

Despite visible progress, AIG’s 31.1% expense ratio remains above its sub-30% ambition, and 2025 results absorbed roughly $300 million of corporate parent expenses into General Insurance plus some Q4 cleanup items. Management emphasized that additional cost actions will be required over the next two years to reach its 2027 goal, making execution on efficiency programs an important watch point for investors.

Catastrophe Charges and Volatility

Catastrophe activity remained a source of earnings noise, with Q4 cat losses totaling about $125 million, or 2.1 points on the loss ratio, and full-year cat charges reaching $920 million, roughly 3.9 points. While AIG’s improved reinsurance program and risk selection have helped limit volatility, the figures underscore the group’s ongoing exposure to natural catastrophe events.

Rate Pressure in Select Lines and Regions

The company is also managing through pricing pressure in certain lines and geographies, particularly North America financial lines where rates fell about 2% and international commercial where overall pricing eased 1% to 2%, with financial lines down roughly 4%. Energy pricing declined around 10%, constraining margin expansion and forcing AIG to rely more on underwriting discipline and mix management to protect profitability.

Modest Top-line Growth in Some Measures

Even with strong new-business wins and strategic deals, general insurance net premiums written grew only modestly, rising 1% in Q4 and 2% for the full year. This measured top-line trajectory reflects a deliberate focus on underwriting quality and pricing discipline rather than chasing volume, which may temper revenue growth but supports the company’s improved combined ratios and ROE.

Execution Risk on Remaining Corbridge Stake

AIG ended the year with a 10.1% remaining stake in Corbridge, which it now has flexibility to sell after a retention waiver, and plans to use most proceeds for additional share repurchases. However, management acknowledged that timing and size of any monetization will depend on market conditions and regulatory approvals, introducing an element of execution risk into the capital-return story.

Forward-Looking Guidance and Strategic Outlook

Management reiterated its confidence in achieving low-to-mid-teens premium growth in 2026, further expense-ratio improvement and continuing strong capital returns, underpinned by strategic deals and reinsurance savings. With GenAI deployment, expanded SPV capacity, accretive Convex and Everest transactions and a focus on underwriting profitability, AIG aims to sustain margin expansion and meet or surpass its 2027 financial objectives.

AIG’s latest earnings call painted the picture of a company that has moved decisively past its restructuring phase into a period of disciplined, profitable growth, albeit with pockets of pressure in property, personal and certain international lines. For investors, the story now hinges on whether management can deliver on its ambitious growth, cost and capital-return targets while navigating pricing headwinds and catastrophe volatility, but the trajectory has clearly turned in the company’s favor.