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AMERICAN INTERNATIONAL GROUP, INC. (AIG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered strong underwriting amid heavy catastrophe losses: Combined ratio rose to 95.8% and accident-year combined ratio, as adjusted, improved to 87.8% (best first-quarter AYCR since the financial crisis) .
  • EPS beat consensus while revenue missed: Adjusted EPS was $1.17 vs Wall Street $0.99; revenue was $6.55B vs $6.89B; EPS beat driven by disciplined underwriting and lower expense ratio, while revenue miss reflects catastrophe impacts and portfolio reshaping; values retrieved from S&P Global*.
  • Net premiums written grew 8% on a comparable basis, led by Global Commercial (+10% comp), North America Commercial (+14% comp), and International Commercial (+8% comp) .
  • Capital return accelerates: $2.5B returned in Q1 (repurchases $2.2B, dividends $234M), Board raised quarterly dividend 12.5% to $0.45; AIG expects $5–$6B of share repurchases in 2025 (subject to market), and repurchase authorization increased to $7.5B (~$7.1B remaining) .
  • Catalysts: aggressive reinsurance (aggregate and occurrence limits) mitigates catastrophe volatility, AI-enabled underwriting advances, and dividend/repurchase upgrades support sentiment; management reaffirmed 2025 core operating ROE ≥10% and 20%+ EPS CAGR target over next three years .

What Went Well and What Went Wrong

  • What Went Well

    • Comparable NPW growth and strong Global Commercial profitability despite elevated cats; North America Commercial AYCR improved 160 bps YoY to 84.3% with a 200 bps decline in the expense ratio .
    • Expense discipline: General Insurance expense ratio fell to 30.5% (–130 bps YoY), aided by travel business divestiture and AIG Next initiatives; “best first quarter AYCR since the financial crisis” .
    • Strategic capital actions: $2.5B returned, dividend raised to $0.45, repurchase authorization to $7.5B; management expects $5–$6B repurchases in 2025 .
    • Quote: “Operating EPS is on track... we expect to achieve a 20% plus earnings per share compound annual growth rate over the next 3 years” .

  • What Went Wrong

    • Heavy catastrophe losses: $525M cat charges in Q1 (9.1 loss ratio points), mainly California wildfires; combined ratio increased to 95.8% .
    • Property pricing pressure: retail and Lexington Property rates decreased 7% and 10% respectively; financial lines down mid-single digits; management remains disciplined and may pull back if pressure persists .
    • Global Personal: combined ratio at 107.9% given wildfire impact; AYCR improved to 95.6% but segment still above target; management targets 500 bps improvement over 3 years toward ~94% .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Adjusted EPS ($)$1.23*$1.30*$1.17*
Revenue ($USD Billions)$6.69*$7.10*$6.55*
Consensus EPS ($)$1.10*$1.23*$0.99*
Consensus Revenue ($USD Billions)$6.77*$6.74*$6.89*

Values retrieved from S&P Global*.

Margins and UnderwritingQ3 2024Q4 2024Q1 2025
Combined Ratio (%)92.6 92.5 95.8
Accident-Year Combined Ratio, as adjusted (%)88.3 88.6 87.8
Key KPIs ($USD Billions unless noted)Q3 2024Q4 2024Q1 2025
Net Premiums Written$6.38 $6.08 $4.53
Underwriting Income ($USD Millions)$437 $454 $243
Catastrophe Charges ($USD Millions)$417 $325 $525
General Insurance Expense Ratio (%)31.9 32.8 30.5
Q1 2025 Segment NPW ($USD Billions)Q1 2025
North America Commercial$1.17; +14% YoY
International Commercial$2.03; +5% YoY (+8% comp)
Global Personal$1.33; –14% YoY (+3% comp)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Dividend/ShareQ2 2025 onward$0.40 (Q1 2025 declared) $0.45 (raised 12.5%) Raised
2025 Share RepurchasesFY 2025~$3.4B remaining under prior $10B 2024–2025 plan Expect $5–$6B (subject to market) Raised
Repurchase AuthorizationCurrentPrior authorization not specified$7.5B total; ~$7.1B remaining Increased
Core Operating ROEFY 2025Target ≥10% Reaffirm ≥10% Maintained
GI Expense Ratio TargetMulti-yearBelow 30% 30.5% in Q1; target maintained Maintained
ADC Amortization2025 Quarterly~$34M/quarter in 2024 ~$31M/quarter in 2025 Lowered
Adjusted Effective Tax RateFY 2025In line with FY 2024 In line with FY 2024 (with quarter-to-quarter variation) Maintained
GI Investment Income OutlookQ2 2025N/AGI NII “up modestly” vs $736M in Q1 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 2024)Current Period (Q1 2025)Trend
AI/Technology in underwritingPilots, partner ecosystem (Palantir, Anthropic) building; underwriter assist launched “No longer pilots”; going live in lines; validated by partners; focus on data ingestion and cycle-time reduction Advancing from pilots to deployment
Property pricing & reinsuranceMarket pressure in Q4; reinsurance renewals improved aggregate/occurrence structure; attachment points managed Retail and Lexington Property rates down; disciplined underwriting; strong reinsurance lowers volatility Pricing pressure; structural risk mitigation holds
Tariffs/macroElevated catastrophe environment; regulatory complexity (California) Management cautious; tariffs create uncertainty; inflation and materials import (85% softwood lumber from Canada) impact loss costs Heightened monitoring and risk margin
Capital return$6.6B repurchases in 2024; outlook to exceed prior guidance $2.5B returned in Q1; dividend raised; expect $5–$6B repurchases in 2025 Accelerating
High Net Worth personal linesImprovement in AYLR; reinsurance quotas and ceding commissions renegotiated Segment CR 107.9% (wildfires), AYCR 95.6%; 3-year plan to improve ~500 bps toward 94% target Improvement plan ongoing

Management Commentary

  • “In the first quarter, adjusted after-tax income was $702 million or $1.17 per diluted share... Net premiums written were $4.5 billion, an increase of 8% year-over-year on a comparable basis” .
  • “If I had to choose just one key takeaway from our Investor Day, it is that AIG is in every way, a different company” .
  • “We expect to achieve a 20% plus earnings per share compound annual growth rate over the next 3 years” .
  • “The Board... approved a 12.5% increase in our quarterly dividend to $0.45 per share” .
  • “Altogether, tariffs create uncertainty... it’s important to consider implications to loss costs and inflation... Canada represents roughly 85% of all U.S. softwood lumber imports” .

Q&A Highlights

  • AI underwriting transformation: multi-year investment with partners (Palantir/LLMs), moving from pilots to live deployments; focus on data quality and cycle time reduction .
  • Pricing dynamics: Property rates down in retail/wholesale; casualty rates above loss trend, particularly excess casualty; management will pull back if rate decreases persist .
  • Tariff/uncertainty response: adding risk margin in certain lines; monitoring inflation inputs to loss costs; no underlying deterioration observed in international portfolio .
  • Expense migration: AIG Next achieved run-rate savings; lean parent allocations moved costs to segments with minimal ratio impact; expect 2025 expense run-rate to resemble Q1 levels .
  • Capital deployment/M&A: disciplined approach; uncertainty may create opportunities; ample liquidity and low leverage support flexibility; will return capital if no additive deals .

Estimates Context

  • Q1 2025: Adjusted EPS $1.17 vs consensus $0.99 (beat), revenue $6.55B vs consensus $6.89B (miss); prior quarters: Q4 2024 EPS $1.30 vs $1.23 (beat), revenue $7.10B vs $6.74B (beat); Q3 2024 EPS $1.23 vs $1.10 (beat), revenue $6.69B vs $6.77B (miss). Values retrieved from S&P Global*.
  • Given EPS beats and revenue variability driven by cats and portfolio divestitures, consensus may need to adjust for catastrophe frequency, segment mix (growth in higher-loss-ratio casualty vs property), and lower ADC amortization in 2025 .

Key Takeaways for Investors

  • Underwriting momentum intact: AYCR improved to 87.8% despite heavy cats; expect volatility managed via robust aggregate/occurrence reinsurance structures .
  • Mix shift implications: Lexington/mid-market casualty growth raises reported loss ratios; watch the balance between growth and margin preservation .
  • Capital returns as a near-term catalyst: dividend raised to $0.45 and $5–$6B buyback expected in 2025; authorization at $7.5B supports flexibility .
  • AI strategy moving to execution phase: live deployments should enhance underwriting throughput and selection; monitor productivity and cycle-time metrics .
  • Global Personal turnaround path: wildfire headwinds mask progress; management targets ~500 bps CR improvement over 3 years toward 94% .
  • Guidance signals stability: core operating ROE ≥10% in 2025 reaffirmed; ADC amortization lower at ~$31M per quarter; GI NII modestly up in Q2 .
  • Trading lens: EPS beats vs revenue misses suggest near-term stock reaction tied to capital return pace and AI/reinsurance narratives rather than top-line; watch rate trends in property and excess casualty and Q2 cat activity for path of CR.

Footnote: Values retrieved from S&P Global*.