American International Group (AIG) Q2 FY26 earnings call: guidance and Q&A

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

Are there any signs of social inflation moderating in the U.S., and how is AIG monitoring this trend?

While there have been some positive 'green shoots' in certain states regarding litigation funding and auto reform, AIG has not seen anything to suggest social inflation is moderating and is not building such an assumption into its pricing at this stage.

“I would say there's been some efforts in some states, whether it was North Carolina, around litigation funding, New York on auto reform, all good green shoots. But ultimately, we haven't seen anything that says that it's moderating at this point, and we're certainly not building that into our pricing at this stage.”

asked by Meyer Shields · answered by Eric Andersen

How does the rising acquisition ratio due to mix shift impact core loss ratios, and is this trend expected to continue?

As rates moderate, there's pressure on loss ratios. The mix shift from property to casualty (where AIG has reduced exposure in property and grown in casualty) causes the loss ratio to tick up. However, overall accident year combined ratio margins have largely held due to strong personal insurance performance and expense ratio improvements. Management emphasizes looking at the overall expense ratio rather than individual components.

“More broadly speaking, you've seen this in the commercial lines book for 5 of the last 6 quarters, right, as we move forward. I'll just make a broader comment, and this goes back to what we've been saying for the last couple of years. Our accident year combined ratio, adjusted margins have largely held, and that's a function of some of the pressures you're seeing in commercial lines loss ratios being offset by the really strong work that was done on the personal insurance side as well as the progress we continue to make on the expense ratio.”

asked by Brian Meredith · answered by Keith Walsh

Is AIG's investment in AI capabilities, like AIG Assist, noticeably impacting business flow and efficiency yet?

AI is having a noticeable impact. Underwriting by AIG Assist allows underwriters to review more submissions faster, improving productivity and consistency. It also provides valuable broker-level insights, enabling AIG to focus resources on partners and clients that align with its appetite, leading to 'better submissions' rather than just more. Claims by AIG Assist improves client interaction speed and efficiency.

“We're seeing more business, we're quoting more business and we're able to actually get a better line of sight on consistency in the underwriting speed in the process, and we feel really good about that, and we're going to continue to drive that forward. The broker level insight it was -- we wanted to point out is something a little bit different.”

asked by Michael Zaremski · answered by Eric Andersen

Given the cautious stance on property and competitive market, is AIG trending towards the low end or below its low-to-mid teens premium growth guide for the year?

AIG is happy with 13% growth in the first half but will not chase growth blindly. The company prioritizes maintaining underwriting standards and discipline for long-term profitability. While there are opportunities, it's still early in the year to definitively update the full-year outlook, but management feels good about current positioning.

“Listen, I think it's a marketplace right now, right? And as we look into the second half, we're pretty happy with the 13% through the first half and 9% in the quarter. But ultimately, what we've been trying to communicate is that we're not going to chase growth blindly, that we want to make sure we maintain our underwriting standards and we maintain the discipline because we want to be a profitable, well-run organization over a long period of time.”

asked by Elyse Greenspan · answered by Eric Andersen