AIG Delivers Outstanding 2025 Results with 43% EPS Growth and Over $2 Billion in Underwriting Income (AIG Q4 2025 Earnings Call)
Export as clean Markdown. Drag & drop into ChatGPT, Claude, or Gemini.
American International Group (AIG) concluded a landmark 2025, delivering exceptional financial results that underscore the success of its multi-year turnaround and strategic repositioning. For the full year, AIG generated $4 billion in adjusted after-tax income (up 24% year-over-year), translating to an adjusted EPS of $7.09, a massive 43% increase. Highlighting its renewed operational excellence, the insurer produced $2.3 billion in underwriting income for the year—marking the first time since 2008 that AIG has surpassed the $2 billion underwriting milestone. As a result, core operating Return on Equity (ROE) hit 11.1%, breaking the 10% barrier for the first time in over a decade.
Underwriting Discipline Drives Consistent Margin Excellence
AIG's fourth-quarter performance demonstrated remarkable consistency in underwriting discipline despite a challenging pricing environment in certain lines. The fourth-quarter accident year combined ratio, as adjusted, was 88.9%, marking the company's 17th consecutive quarter with a sub-90% result. The calendar year combined ratio improved significantly by 370 basis points to 88.8%.
Growth was healthy, with Global Commercial net premiums written up 3% for the full year to $17.4 billion. This was supported by robust new business generation, which grew 9% globally. While the North American Property market saw significant pricing pressure (Retail Property pricing was down 10% and E&S Property down 13%), AIG offset this with disciplined expansion in Casualty. North America Casualty pricing remained highly favorable, increasing in the mid-teens and continuing to outpace loss cost trends.
In addition to underwriting gains, AIG made significant strides in operational efficiency. The company's expense ratio ended the year at 31.1%, down 90 basis points from 2024. Management reiterated their confidence in driving the expense ratio below 30% by 2027, aided by the aggressive rollout of Generative AI tools like "Underwriting by AIG Assist," which is already significantly boosting submission-to-bind ratios and processing speeds.
Capital Optimization and Strategic M&A
AIG's balance sheet and capital allocation strategies were equally impressive in 2025. The company returned a staggering $6.8 billion to shareholders, comprising $5.8 billion in share repurchases and $1 billion in dividends. Furthermore, AIG successfully navigated its ongoing deconsolidation of Corebridge Financial. The company reduced its stake to just 10.1% by year-end, and following a recent waiver from Nippon Life regarding retention requirements, AIG plans to continue selling down its position throughout 2026, using the majority of those proceeds for additional share buybacks.
On the strategic front, AIG executed several highly accretive transactions designed to boost premium growth and ROE without adding balance-sheet complexity. The company secured a renewal rights deal for Everest's global retail insurance portfolio, which is tracking ahead of expectations with a 75% retention rate in January. Additionally, AIG closed a strategic investment taking a roughly 35% equity stake in Convex Group, alongside a new quota share agreement that will incrementally expand AIG's specialty market presence through 2028.
Highly Favorable Reinsurance Renewals and 2026 Outlook
A key tailwind for AIG heading into 2026 was the highly favorable January 1 reinsurance renewal season. Taking advantage of abundant market capacity and its own strong portfolio performance, AIG secured risk-adjusted rate decreases in excess of 15% on its property catastrophe program while maintaining consistent attachment points.
Looking forward to 2026, outgoing CEO Peter Zaffino (who is transitioning to Executive Chair, with Eric Andersen taking over as CEO) provided an exceptionally bullish outlook. Driven by organic initiatives, the Everest portfolio conversion, and strategic partnerships, AIG is forecasting low to mid-teens net premium written growth in General Insurance for 2026, indicating that the insurer's momentum is poised to accelerate.