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    AIG
    Earnings call· Jun 2026(Q2 FY26)

    AMERICAN INTERNATIONAL GROUP Q2 FY26 earnings call AIG

    Aug 7, 2026 Source

    Executive summary

    American International Group, Inc. Q2 FY26 — Strong Underwriting and Capital Returns Amidst Market Transition

    AIG delivered strong Q2 FY26 results, driven by underwriting excellence and strategic growth initiatives, while navigating a transitioning market with increased capacity and selective pricing pressures. The company remains focused on disciplined capital deployment, AI integration, and expense management to drive long-term value, emphasizing profitability as its North Star.

    Highlights

    5

    • Adjusted after-tax income per diluted share increased 10% year-over-year to $2.

    • Underwriting income grew 10% year-over-year to $686 million.

    • The accident year combined ratio, as adjusted, improved 30 basis points to 88.1%.

    • Net premiums written increased 9% (11% excluding North American Property) reflecting organic growth and strategic transactions.

    • Returned $904 million in capital to shareholders, including $641 million in share repurchases and $263 million in dividends.

    Concerns

    5

    • Competitive pricing pressure in certain lines like property, leading to a 9 percentage point reduction in premium retention at Lexington Property.

    • International Commercial renewal pricing declined 6% and Global energy store pricing decreased 15%.

    • Total catastrophe charges were $210 million, including $75 million in net losses related to the Middle East conflict.

    • Alternative investment income declined to $13 million from $48 million in the prior year quarter, due to an $8 million loss in private equity.

    • Social inflation is not seen as moderating and is not being built into pricing assumptions.

    Guidance & targets

    1
    CategoryTargetConfidence
    General Insurance expense ratio
    below 30%
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    General Insurance
    Strong second quarter reflecting higher underwriting income and interest income, partially offset by lower alternatives income. First half underwriting income increased 68% to $1.5 billion.
    Underwriting income: $686MUnderwriting income growth YoY: 10%Net premiums earned: $6.2BNet premiums earned growth YoY: 5%Accident year combined ratio as adjusted: 88.1%Accident year combined ratio improvement YoY: 30 bpsCalendar year combined ratio: 89.0%Calendar year combined ratio improvement YoY: 30 bps
    		———$1.5B (adjusted pretax income)
    North America Commercial
    Growth driven by retail casualty and financial lines, partially offset by declines in Lexington property. Loss ratio increase due to business mix shift (reduced property, more casualty) and rate pressure. Overall calendar year combined ratio showed excellent improvement.
    Accident year combined ratio as adjusted: 86.7%Accident year combined ratio increase YoY: 50 bpsAccident year loss ratio as adjusted: 63.4%Accident year loss ratio increase YoY: 30 bpsExpense ratio increase YoY: 20 bpsCatastrophe losses: 410 bpsFavorable prior year development: 680 bpsCalendar year combined ratio: 84.0%Calendar year combined ratio improvement YoY: 190 bps
    		—9%——
    International Commercial
    Growth driven by Property and Marine, partially offset by financial lines. Loss ratio increase reflects rate pressure. Expense ratio increase driven by higher acquisition ratio due to strong new business growth and mix changes.
    Accident year combined ratio as adjusted: 87.3%Accident year combined ratio increase YoY: 230 bpsAccident year loss ratio: 55.2%Accident year loss ratio increase YoY: 100 bpsExpense ratio: 32.1%Expense ratio increase YoY: 130 bpsCatastrophe losses: 390 bpsCalendar year combined ratio: 91.3%
    		—10%——
    Global Personal
    Strong growth momentum in Accident & Health and high net worth, with significant profitability improvement. Improvements driven by underwriting actions, lower reinsurance costs, and more favorable high net worth commission terms.
    Underwriting income increase YoY: nearly $90MAdjusted accident year underwriting income: more than doubledAccident year combined ratio as adjusted: 91.2%Accident year combined ratio decrease YoY: 490 bpsAccident year loss ratio: 51.5%Accident year loss ratio improvement YoY: 270 bpsExpense ratio improvement YoY: 220 bpsCatastrophe losses: 170 bpsCalendar year combined ratio: 92.9%Calendar year combined ratio improvement YoY: 560 bpsFirst half 2026 combined ratio: 91.2%First half 2026 combined ratio improvement YoY: 1,200 bps
    		—8%—$114M (underwriting income)

    Operational metrics

    27
    Adjusted after-tax income per diluted share
    $210% increase year-over-year
    Q2 FY26
    Adjusted after-tax income
    $1.1B
    Q2 FY26
    Core operating ROE
    11.1%
    Q2 FY26
    Core operating ROE
    11.6%
    H1 FY26
    General Insurance adjusted pretax income
    $1.5Bup 4% from prior year quarter
    Q2 FY26
    General Insurance expense ratio
    30.8%improved 20 basis points year-over-year
    Q2 FY26

    This is the expense ratio for the accident year combined ratio as adjusted.

    General Insurance expense ratio (trailing 12-month)
    30.7%
    as of June 30, 2026

    Reflects increased operating leverage and continued expense discipline.

    Accident year loss ratio as adjusted
    57.3%improved 10 basis points from prior year quarter
    Q2 FY26
    Net investment income (APTI basis)
    $908M
    Q2 FY26
    Core fixed income portfolio net investment income growth
    4%from prior year quarter
    Q2 FY26
    Average new money yield on core fixed income portfolio
    4.72%30 basis point improvement over prior year quarter
    Q2 FY26

    Roughly 60 basis points higher than sales and maturities.

    Alternative investment income
    $13Mdown from $48M in prior year quarter
    Q2 FY26

    Private equity is reported on a 1-quarter lag, reflecting Q1 2026 market volatility.

    Adjusted pretax loss (other operations)
    $142Mversus a loss of $101M in prior year quarter
    Q2 FY26

    Driven by lower net investment income and other, which included $27M of Core Bridge dividends in prior year quarter, and lower short-term investment income in current quarter.

    Total debt
    $9B
    Q2 FY26
    Total debt to adjusted capital ratio
    17.6%
    Q2 FY26
    North America Commercial renewal pricing (ex-property)
    5%year-over-year
    Q2 FY26
    North America Retail Casualty pricing
    10%
    Q2 FY26

    Exceeding loss cost trend.

    North America Excess Casualty pricing
    14%
    Q2 FY26

    Mid-teen pricing increases.

    Glatfelter and programs pricing
    7% and 5%
    Q2 FY26

    For small and medium businesses.

    Financial lines pricing (ex-cyber)
    flatimproved from prior year
    Q2 FY26

    Positive pricing change in targeted classes of D&O.

    International Commercial renewal pricing
    declined 6%
    Q2 FY26

    Following multiple years of compounded rate increases.

    Global energy store pricing
    decreased 15%
    Q2 FY26
    International Financial lines pricing
    down 4%
    Q2 FY26
    Political violence pricing
    increased 9%compared to a decrease of 8% in Q1
    Q2 FY26

    Driven by elevated risk exposure associated with broader conflict.

    Net favorable loss reserve development
    $146M
    Q2 FY26

    Part of $145M favorable prior year development net of reinsurance and prior year premium.

    ADC amortization
    $26M
    Q2 FY26

    Part of $145M favorable prior year development net of reinsurance and prior year premium.

    Prior year return premiums
    $27M
    Q2 FY26

    Part of $145M favorable prior year development net of reinsurance and prior year premium.

    Industry KPIs

    10
    MetricValueDetails
    Combined ratio88.1%%
    Capital returns$904MUSD
    ROE operating ROE11.1%%
    Catastrophe losses$210MUSD
    Book value per share$77.39USD
    Net investment income$871MUSD
    Retention persistency88%%
    Net premiums written earnedincreased 9%%
    Renewal rate change pricing5%%
    Prior year reserve development$145M favorableUSD

    Deals & partnerships

    1
    Everest InsuranceAgreement to acquire Everest Insurance operations in Colombia.

    Upon closing, this acquisition will give AIG access to one of the largest and fastest developing insurance markets in Latin America, supporting growth ambitions in the region.

    Risks & headwinds

    4
    Competitive pricing pressure in property marketQ2 FY26 and ongoing

    Lexington property premium retention reduced by 9 percentage points in Q2; overall North America growth reduced by over 3 percentage points.

    Mitigation: Intentionally contracting Lexington property portfolio in targeted areas, selectively growing parts that deliver best risk-adjusted returns, offering terms that reflect risk view, walking away from business not meeting underwriting standards.

    Social inflation and litigation fundingOngoing

    Not moderating, not built into pricing.

    Mitigation: Monitoring efforts in states like North Carolina (litigation funding) and New York (auto reform), but not yet seeing broad moderation.

    Middle East conflict exposureQ2 FY26 and ongoing

    $75 million in net catastrophe losses; heightened exposure in energy and aviation markets.

    Mitigation: Providing advice, capacity, and support to clients operating in the region; staying connected to governments, marine and shipping clients; claims team working closely with clients.

    Rate pressure in International Commercial and Global Specialty (Energy)Q2 FY26 and ongoing

    International Commercial renewal pricing declined 6%; Global energy store pricing decreased 15%.

    Mitigation: Focusing on preserving margin and being disciplined in underwriting standards; picking through best opportunities in energy market.

    What to watch in Q3 FY26

    5

    General Insurance expense ratio

    next quarter / FY27
    Current30.7% (trailing 12-month)
    Targetbelow 30% for full year 2027

    Why it matters

    This is a key Investor Day commitment, and progress towards this target indicates operating leverage and efficiency gains.

    We remain on track to reduce the general insurance expense ratio of below 30% for full year 2027.

    Q&A highlights

    5

    Why is AIG's ROE still lower than peers despite similar combined ratios, suggesting lower premium leverage? What prevents higher leverage, and how is it managed in a soft market?

    Management prefers to grow into its capital base, but also believes in returning capital via buybacks and dividends. Strategic transactions contribute to premium volume. The company has a rock-solid balance sheet, strong liquidity, and debt capacity. Achieving higher ROE requires strong execution across underwriting, expense discipline, investment income, and capital management.

    “As an insurance company, we're pretty fortunate to have a rock solid balance sheet. And as I think I said in the prepared remarks, we see a lot of opportunities to grow the business. And so our preference is to focus on growing into the capital base.”

    asked by Taylor Scott · answered by Eric Andersen

    2 min read5 chapters

    Detailed Narrative

    01

    Market Environment and Underwriting Discipline

    The market is transitioning from broad positive pricing to a more selective environment, with increased capacity from E&S carriers, MGAs, and ILS. This has created competitive pricing pressure in certain lines, particularly property. AIG is responding by deploying capital selectively where pricing, margin, and risk quality meet its appetite, and is retaining business that meets underwriting standards while walking away from inadequate terms.

    02

    Property Market Dynamics

    In North America, particularly E&S, pricing remains under pressure. AIG has intentionally contracted its Lexington property portfolio in targeted areas, resulting in a 9 percentage point reduction in premium retention in Q2. This, combined with the pricing environment, reduced overall North America growth by over 3 percentage points. International property rates are declining more moderately and remain an attractive portfolio with lower peak catastrophe exposure.

    03

    Casualty and Specialty Market Performance

    North America Retail Casualty pricing is up double digits and remains above loss cost trends, while excess casualty saw mid-teen pricing increases. In Global Specialty, AIG is closely monitoring energy and aviation markets due to pricing not reflecting heightened exposure from the Middle East conflict and recent large industry losses. Political violence and terrorism rates, however, increased 9% in Q2 due to elevated risk exposure.

    04

    Strategic Priorities and AI Capabilities

    AIG's growth plan is built on five strategic priorities: exceptional underwriting, efficient balance sheet/reinsurance, expanding AI capabilities, expense discipline, and talent investment. The company is scaling 'underwriting by AIG Assist' and 'claims by AIG Assist,' which are improving underwriter productivity, submission review speed, and generating valuable commercial insights into broker performance and distribution trends.

    05

    Reserve Position and Social Inflation

    Management expressed confidence in its reserve position, citing a limit management strategy, comprehensive reinsurance, and a rigorous 90-day portfolio review process. While some efforts have been made in certain states, AIG has not observed any moderation in social inflation and is not incorporating such an assumption into its pricing models at this stage.

    AI-generated summary of the company’s earnings call. Not investment advice.