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    AIG
    Earnings call· Sep 2025(Q3 FY25)

    AMERICAN INTERNATIONAL GROUP, INC. AIG

    Nov 5, 2025 Source

    Executive summary

    American International Group, Inc. Q3 FY25 — Strong Profitability and Strategic Capital Deployment

    AIG delivered a strong quarter, marked by significant profitability gains and strategic capital deployment through key investments and renewal rights acquisitions. The company is actively leveraging GenAI to enhance underwriting efficiency and accelerate growth, while maintaining a disciplined capital management strategy focused on shareholder returns and future strategic value.

    Highlights

    5

    • Adjusted after-tax income per diluted share increased 77% year-over-year to $2.20.

    • Underwriting income grew 81% year-over-year to $793 million.

    • General Insurance accident year combined ratio, as adjusted, was 88.3%, marking the 16th consecutive quarter with a sub-90% result.

    • Annualized core operating ROE reached 13.6% in Q3 FY25, up 430 basis points year-over-year.

    • Strategic investments in Convex Group, Onex Corporation, and the acquisition of Everest Group renewal rights are expected to be earnings, EPS, and ROE accretive in the first year post-closing.

    Concerns

    3

    • Global Personal net premiums written decreased 4% year-over-year due to a high net worth quota share reinsurance treaty.

    • North America Property experienced continued pricing pressure, with Retail Property declining 10% and Lexington Property declining 8%.

    • North America Financial Lines pricing was down 2% and Global Specialty pricing was down 4%.

    Guidance & targets

    5
    CategoryTargetConfidence
    General Insurance expense ratio
    below 30%
    medium materiality
    High
    Share repurchases
    up to $1 billion
    medium materiality
    High
    Dividend per share increase
    over 10%
    medium materiality
    High
    Private credit allocation
    12% to 15%
    low materiality
    Medium
    Global Personal net premiums written trend
    reverse
    low materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    North America Commercial
    Net premiums written were flat year-over-year, but would have increased 3% adjusting for a prior year closeout transaction. Growth was driven by Programs, Western World, and Excess Casualty, partially offset by declines in Property. New business was strong, particularly in Lexington and Financial Lines. The accident year combined ratio increased slightly due to business mix changes, while the calendar year combined ratio saw significant improvement.
    Net Premiums Written (adjusted for prior year closeout transaction): +3%Programs NPW growth: +27%Western World NPW growth: +11%Excess Casualty NPW growth: +8%Retail Property NPW decline: -10%Lexington Property NPW decline: -8%Lexington new business: flat YoYLexington submission count: +18% YoYFinancial Lines new business: +16%Accident Year Loss Ratio: 62.1%Expense Ratio: 23.3%Catastrophe losses: 310 basis pointsFavorable prior year development: 590 basis pointsCalendar Year Combined Ratio: 82.6%
    		—flat—85.4% (Accident Year Combined Ratio, as adjusted)
    International Commercial
    Net premiums written increased 1%, driven by Marine and Property, partially offset by Financial Lines. New business was outstanding, led by Specialty, Marine, Energy, Property, and Financial Lines. The accident year combined ratio increased, largely due to reapportionment of unallocated loss adjustment expenses and less favorability in Specialty. This segment achieved its 10th consecutive quarter of a sub-90% combined ratio.
    Net Premiums Written growth: +1%Marine NPW growth: +11%Property NPW growth: +6%Financial Lines NPW decline: -6%Specialty new business growth: +17%Marine new business growth: +35%Energy new business growth: +30%Property new business growth: +24%Financial Lines new business growth: +12%Accident Year Loss Ratio: 54.4%Expense Ratio: 31.6%Catastrophe losses: 80 basis pointsFavorable prior year development: 190 basis pointsCalendar Year Combined Ratio: 84.9%
    		—+1%—86.0% (Accident Year Combined Ratio, as adjusted)
    Global Personal
    Net premiums written decreased 4% due to a high net worth quota share reinsurance treaty, which is expected to reverse in 2026. The accident year combined ratio improved 330 basis points, adjusted for the divested travel business. The accident year loss ratio improved due to underwriting actions and lower reinsurance costs, and the expense ratio improved due to better commission terms, operational efficiencies, and business mix changes. Steady progress is being made on profitability.
    Net Premiums Written decline: -4%Accident Year Loss Ratio: 55.3%Expense Ratio: 40.2%Catastrophe losses: 80 basis pointsFavorable prior year development: 110 basis pointsCalendar Year Combined Ratio: 95.2%
    		—-4%—95.5% (Accident Year Combined Ratio, as adjusted)

    Operational metrics

    37
    Adjusted after-tax income
    $1.2 billion+52% YoY
    Q3 FY25

    Driven by General Insurance business.

    Underwriting income
    $793 million+81% YoY
    Q3 FY25
    General Insurance gross premiums written
    $8.7 billion+1% YoY
    Q3 FY25
    General Insurance net premiums written
    $6.2 billion-1% YoY
    Q3 FY25
    General Insurance accident year loss ratio
    57.4%+100 bps YoY
    Q3 FY25

    Primarily driven by reapportionment of unallocated loss adjustment expenses and less favorable actual vs. expected in Specialty in prior year, partially offset by underlying improvement in Global Personal.

    General Insurance expense ratio
    30.9%-100 bps YoY
    Q3 FY25
    General Insurance expense ratio
    30.8%vs 31.7% prior year period
    9M FY25

    Demonstrates operational excellence and discipline in driving efficiencies.

    Total catastrophe losses
    $100 million
    Q3 FY25
    Prior year development, net of reinsurance
    $205 million favorable
    Q3 FY25

    Includes reapportionment of uncertainty provision, not related to observable deterioration.

    North America Commercial accident year loss ratio
    62.1%+30 bps YoY
    Q3 FY25

    Owing to changes in business mix as Casualty business earns in and certain property lines reduce, and a partial one-time offset due to last year's Casualty closeout transaction.

    North America Commercial expense ratio
    23.3%flat YoY
    Q3 FY25
    International Commercial accident year loss ratio
    54.4%+170 bps YoY
    Q3 FY25

    Largely from reapportionment of unallocated loss adjustment expenses and less favorability in Specialty.

    International Commercial expense ratio
    31.6%+90 bps YoY
    Q3 FY25

    Driven by movement of expenses from other operations.

    Global Personal accident year loss ratio
    55.3%-90 bps YoY improvement
    Q3 FY25

    Driven by underwriting actions leading to stronger underlying profitability and lower reinsurance costs.

    Global Personal expense ratio
    40.2%-240 bps YoY improvement
    Q3 FY25

    Benefiting from improved commission terms in U.S. high net worth business, operational efficiencies, and changes in business mix.

    Other Operations adjusted pretax loss
    $116 millionvs $135 million prior year quarter
    Q3 FY25

    Reflects significant reduction in general operating expense and lower interest expense, partially offset by lower net investment income.

    Total General Operating Expense (GI + Other Ops)
    $866 million+1% YoY (adjusted for Travel)
    Q3 FY25
    Total General Operating Expense (GI + Other Ops)
    $2.5 billion-2% YoY
    9M FY25

    While net premiums earned grew by 5%, reflecting positive operating leverage.

    Average new money yield (fixed maturity and loan portfolio)
    4.58%+69 bps YoY
    Q3 FY25

    Average new money yield was roughly 95 basis points higher than sales and maturities.

    Alternative investment income
    $137 millionvs $43 million prior year quarter
    Q3 FY25

    Contributed by well-diversified private equity portfolio.

    Private credit allocation (GI portfolio)
    $6.4 billion
    Q3 FY25

    Allocation has not materially changed since Investor Day.

    Hedge funds and global real estate reduction
    $1.5 billion
    since 2021

    Collective reduction as part of portfolio rebalancing.

    Other Operations net investment income
    $77 milliondeclined $43 million YoY
    Q3 FY25

    Largely reflects income from parent liquidity portfolio (~$50M) and Corebridge Financial dividend income ($20M).

    Corebridge Financial ownership
    15.5%
    Q3 FY25

    After sale of 31 million shares in Q3 FY25.

    Corebridge Financial shares sold
    31 million shares
    Q3 FY25
    Corebridge Financial shares sold (post Q3)
    32 million shares
    after Q3 FY25

    Exercised after Q3 FY25 to fund acquisitions and capital management.

    Capital returned to shareholders
    $1.5 billion
    Q3 FY25
    Share repurchases
    $5.3 billion
    9M FY25
    Shares outstanding
    544 million
    Q3 FY25

    Reduced through share repurchases.

    Debt to total capital ratio
    18%
    Q3 FY25
    Parent liquidity
    $5.3 billion
    end Q3 FY25
    Ordinary dividends from insurance subsidiaries
    $3 billion
    annually
    Parent costs absorbed by General Insurance
    $400 million
    since 2023

    Costs that used to be in other operations.

    Other operations expense
    $350 million
    FY25

    Expected for full year 2025.

    Underwriting by AIG Assist processing rate
    100%
    Q3 FY25

    Rolled out late last year.

    Lexington middle market submission count
    nearly 200,000
    year-to-date

    Growing dramatically, cannot get to all activity without technology.

    Schedule P data points ingested
    4 million
    ongoing

    Used for insights on loss ratios, reserve development, and trends across lines of business.

    Industry KPIs

    11
    MetricValueDetails
    Combined ratio88.3%%
    Capital returns$1.5 billionUSD
    ROE operating ROE13.6%%
    Catastrophe losses$100 millionUSD
    Book value per share$75.45USD
    Net investment income$1 billionUSD
    Retention persistency—
    Net premiums written earned$6.2 billionUSD
    Renewal rate change pricing—
    Statutory regulatory capital—
    Prior year reserve development$205 million favorableUSD

    Product announcements

    3
    ProductTypeDetails
    Underwriting by AIG Assistexpansion
    Claims by AIG Assistmilestone
    Auto Extractlaunch

    Deals & partnerships

    3
    Convex GroupAcquisition of 35% equity interest and whole account quota share agreement35% equity interestQuota share progressively increases to 12.5% by 2028

    AIG agreed to acquire a 35% equity interest in Convex, while Onex Corporation took a 63% ownership position. AIG will also participate in Convex's portfolio through a whole account quota share.

    Onex CorporationAcquisition of 9.9% equity interest and commitment to invest across asset management platform9.9% equity interest; $2 billion investment commitment3 years for investment commitment

    AIG agreed to acquire a 9.9% equity interest in Onex Corporation. AIG committed to invest $2 billion over 3 years across Onex's broad asset management platform, including insurance co-investments.

    Everest GroupAcquisition of renewal rights for the majority of Everest's core retail commercial property and casualty portfolios$300 million (purchase price, with potential downward adjustment of up to $70 million)

    AIG purchased the renewal rights for approximately $2 billion of gross premiums written. AIG did not take any in-force portfolio, unearned premium, or liabilities for policies effective prior to December 31, 2025. The portfolio is diversified across geographies (US $1.3B, Europe $400M, UK $150M, Australia $80M, Singapore $70M) and business mix (40% Casualty, 30% Property, 25% Financial Lines). Approximately 60% of the portfolio will renew in H1 2026. Excludes Canada, Latin America, aviation, surety, and wholesale lines. Regulatory approval is pending in the EU.

    Risks & headwinds

    4
    Global Personal Net Premiums Written declineQ3 FY25

    decreased 4% YoY

    Mitigation: Driven by a high net worth quota share reinsurance treaty which improves profitability for 2025; premium trend expected to reverse in 2026.

    North America Property pricing pressureQ3 FY25

    Retail Property declined 10%; Lexington Property declined 8%

    Mitigation: AIG is prioritizing underwriting discipline; combined ratios remain exceptional for the Property portfolio despite rate pressure.

    Financial Lines and Global Specialty pricing pressureQ3 FY25

    North America Financial Lines pricing down 2%; Global Specialty pricing down 4%; Talbot and Financial Lines pricing down 4%

    Mitigation: Focus on differentiated offering and leadership position; cumulative rate increases in Global Specialty have been very strong (over 100% in Energy since 2018); AIG's diversified portfolio allows management across geographies and products.

    Everest Casualty portfolio adverse developmentback years

    80% of adverse development in back years from policies not renewed

    Mitigation: Everest has done a good job remediating the portfolio; AIG has extensive experience repositioning Casualty portfolios with strong underwriters and stricter underwriting standards; the portfolio will be positioned for success.

    What to watch in Q4 FY25

    5

    Global Personal Net Premiums Written trend

    2026
    Current-4% YoY (Q3 FY25)
    TargetPositive growth

    Why it matters

    Indicates the effectiveness of the high net worth quota share reinsurance treaty on profitability and growth.

    While this continues to improve profitability in the portfolio for 2025, it negatively impacted Global Personal net premiums written. We expect to see this premium trend reverse in 2026.

    Q&A highlights

    7

    What is the expected underwriting profitability (combined ratio) for the Convex quota share and the Everest renewal rights portfolio, both initially and over time, especially considering Everest's reported combined ratio?

    For Convex, it's a whole account quota share with a highly profitable company, and AIG expects to benefit from their strong combined ratios. For Everest, the International portfolio is expected to perform similarly to AIG's. U.S. Property will be at AIG's exceptional combined ratios. Financial Lines will have a similar overall combined ratio due to lower expenses offsetting slightly higher loss ratios. Casualty, while receiving attention, is expected to improve meaningfully under AIG's underwriting and reinsurance structure, with ceding commission being a tailwind.

    “The ceding commission will absolutely be a tailwind and accretive to the combined ratio. We have a low 30 seed. We're bringing very little expense over. The acquisition expenses are at or slightly below ours. I would look to forecast them at ours. But we would expect even on a written basis, same-store sales with the way we're structured, the way we underwrite and the way we structure reinsurance that the combined ratios are going to improve in a meaningful way.”

    asked by Alex Scott · answered by Peter Zaffino

    3 min read7 chapters

    Detailed Narrative

    01

    Q3 FY25 Financial Highlights

    AIG reported adjusted after-tax income per diluted share of $2.20, a 77% increase year-over-year. Adjusted after-tax income for the quarter was $1.2 billion, up 52% year-over-year, primarily driven by the General Insurance business. Underwriting income reached $793 million, an 81% increase, while adjusted pretax net investment income was $1 billion, up 15%. The General Insurance accident year combined ratio, as adjusted, remained strong at 88.3%, marking the 16th consecutive quarter below 90%, and the calendar year combined ratio improved 580 basis points to 86.8%.

    02

    Strategic Investments and Capital Deployment

    AIG announced three strategic transactions: acquiring a 35% equity interest in Convex Group with a whole account quota share (starting at 7.5% in 2026, increasing to 12.5% by 2028); acquiring a 9.9% equity interest in Onex Corporation and committing to invest $2 billion over 3 years across its asset management platform; and purchasing renewal rights for approximately $2 billion of Everest Group's core retail commercial P&C portfolios for $300 million. All three are expected to be earnings, EPS, and ROE accretive in the first year post-closing, with Convex and Onex transactions expected to close in H1 2026.

    03

    General Insurance Segment Performance

    North America Commercial net premiums written were flat year-over-year (up 3% adjusted for a prior year transaction), with growth in Programs (+27%), Western World (+11%), and Excess Casualty (+8%) offset by declines in Retail Property (-10%) and Lexington Property (-8%). International Commercial NPW increased 1%, driven by Marine (+11%) and Property (+6%). Global Personal NPW decreased 4% due to a high net worth quota share reinsurance treaty, a trend expected to reverse in 2026.

    04

    Underwriting Profitability and Expense Management

    The General Insurance accident year combined ratio was 88.3%, consistent with the prior year, while the expense ratio improved 100 basis points year-over-year to 30.9%. Total catastrophe losses for the quarter were $100 million, or 1.6 loss ratio points. Favorable prior year development, net of reinsurance, totaled $205 million. AIG is on track to achieve its target of a General Insurance expense ratio below 30% by 2027, demonstrating strong operational discipline and efficiency.

    05

    GenAI Initiatives and Operational Efficiency

    AIG is accelerating the deployment of GenAI solutions to enhance underwriting and claims processes. 'Underwriting by AIG Assist' is now processing 100% of applicable submissions in North America Financial Lines' private and not-for-profit business, increasing the submit-to-bind ratio, and has been deployed in Lexington middle market P&C. The company also developed 'Auto Extract' for structured data extraction and ingests Schedule P information for over 225 U.S. insurers, leveraging 4 million data points for portfolio management and insights.

    06

    Capital Management and Shareholder Returns

    AIG returned $1.5 billion to shareholders in Q3 FY25, comprising $1.25 billion in share repurchases and $250 million in common stock dividends. Year-to-date, share repurchases totaled $5.3 billion. The company maintains strong parent liquidity of $5.3 billion and a debt to total capital ratio of 18%. For 2026, AIG expects share repurchases up to $1 billion and anticipates a dividend per share increase of over 10%, consistent with 2025.

    07

    Investment Portfolio Optimization

    Adjusted pretax net investment income grew 15% year-over-year to $1 billion, driven by optimization of lower-yielding fixed maturity portfolios and strong alternative returns. The average new money yield on fixed maturity and loan portfolios was 4.58%, a 69 basis point improvement. AIG plans to opportunistically increase its private credit allocation from the current 8% ($6.4 billion) to 12-15% over time⏳, with Onex becoming a strategic partner for these investments.

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