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AMERICAN INTERNATIONAL GROUP, INC. (AIG)·Q3 2025 Earnings Summary

Executive Summary

  • AIG delivered strong Q3 with adjusted EPS of $2.20, up 77% YoY, and GAAP EPS of $0.93; General Insurance underwriting income rose 81% to $793M and the combined ratio improved 580 bps to 86.8% .
  • Versus Wall Street: Adjusted EPS beat consensus by ~+$0.49 (≈+29%); reported revenue was below consensus by ~$0.52B (≈-8%)—see Estimates Context for details and SPGI data caveats.*
  • Strategic catalysts: announced renewal rights for ~$2B of Everest retail commercial premiums (effective largely 1/1/26) and long-term investments in Convex (35% stake + quota share) and Onex (9.9% stake; up to $2B commitments)—management expects accretion to earnings, EPS and ROE post close .
  • Capital returns remained robust: ~$1.5B returned (buybacks ~$1.25B; dividends ~$250M); Core Operating ROE reached 13.6% (10.9% YTD) and debt-to-capital was 18% .

What Went Well and What Went Wrong

  • What Went Well

    • Material underwriting improvement: GI combined ratio 86.8% (from 92.6% LY) as catastrophe losses fell to $100M (1.6 pts) vs $417M (6.9 pts) LY and expense ratio declined 100 bps .
    • Strong adjusted EPS and ROE: AATI/share $2.20 (+77% YoY), Core Operating ROE 13.6% on higher GI underwriting income and higher NII on an APTI basis (+15% YoY to $1.0B) .
    • Strategic optionality: Everest renewal rights, Convex and Onex transactions expected to be accretive; renewal rights structured without assuming legacy liabilities and minimal incremental capital needs .

  • What Went Wrong

    • Accident-year loss ratio ticked up: AYLR increased 100 bps YoY (to 57.4%) and AYCR stayed flat at 88.3%; NA Property rates remain pressured, though profitability remains strong .
    • Global Personal topline contracted: NPW down 11% YoY (reported) due to reinsurance changes in U.S. High Net Worth; CR improved to 95.2% but AYCR remains elevated at 95.5% .
    • International expense pressure: International Commercial AYCR rose to 86.0% (+260 bps YoY) given higher reapportioned corporate expenses, partly offset by lower CATs .

Financial Results

Headline performance by quarter

MetricQ3 2024Q2 2025Q3 2025
Adjusted EPS (AATI per diluted share)$1.24 $1.81 $2.20
GAAP EPS (diluted)$0.71 $1.98 $0.93
GI Underwriting Income ($M)$437 $626 $793
GI Combined Ratio (%)92.6 89.3 86.8
GI AYCR, as adjusted (%)88.3 88.4 88.3
Net Premiums Written – GI ($M)$6,380 $6,880 $6,230

Q3 2025 actual vs consensus (S&P Global)

MetricActualConsensusSurprise
Adjusted EPS ($)$2.20 $1.71*+$0.49 (~+29%)
Revenue ($B)$6.41*$6.93*-$0.52 (~-8%)

*Values retrieved from S&P Global.

Segment performance (YoY)

SegmentNPW ($M) Q3’24NPW ($M) Q3’25CR (%) Q3’24CR (%) Q3’25AYCR (%) Q3’24AYCR (%) Q3’25
North America Commercial2,445 2,435 95.5 82.6 85.1 85.4
International Commercial2,052 2,115 84.3 84.9 83.4 86.0
Global Personal1,883 1,680 98.8 95.2 97.8 95.5

Key KPIs

KPIQ2 2025Q3 2025
Capital Returned ($B)$2.0 ($1.8B buybacks; $0.254B dividends) $1.5 ($1.25B buybacks; $0.25B dividends)
Core Operating ROE (%)11.7 13.6
Debt / Total Capital (%)17.9 18.0
Net Investment Income – APTI basis ($B)$0.955 $1.024
GI Net Investment Income – APTI basis ($M)$871 $945

Context and drivers

  • CAT losses totaled $100M (1.6 pts) vs $417M (6.9 pts) LY; favorable PYD net of reinsurance of $180M (8‑K) and $205M including ADC amortization (call), plus lower acquisition expenses, supported underwriting income growth .
  • GI expense ratio improved 100 bps YoY to 30.9%; management reiterated path to sub‑30% by 2027 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Share repurchasesFY 2026Not quantified“We expect share repurchases up to $1B for 2026” New specificity
GI Expense RatioThrough 2027Target below 30% (Investor Day framework)Reiterated “expect to achieve target of below 30% by 2027” Maintained
Core Operating ROE2025–202710%+ for FY25 Maintain 10–13% through 2027 Extended horizon
Dividend growthFY 2026+12.5% QoQ increase set for 2025 Expect “to be in a position” to grow >10% in 2026, subject to Board Maintained positive stance
Strategic deals1H 2026 closeN/AConvex 35% stake + quota share; Onex 9.9% stake + up to $2B commitments—both expected EPS/ROE accretive post close New
Everest renewal rights1/1/26 (most geos)N/ARenewals commence Jan 1, 2026 ex‑EU; EU in 1Q26 pending approvals New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
AI / TechnologyEfficiency and cost focus highlighted (AIG Next); no AI specifics in press releases Rapid rollout of “underwriting by AIG Assist” (Lexington, NA/UK/EMEA), “claims by AIG Assist,” and “Autoextract” LLM data ingestion Accelerating deployment
Pricing & mix (Property/Casualty)Strong AYCR despite Q1 CATs; Q2 property pressure noted via mix but profitability strong NA property still rate‑pressured but profitable; casualty pricing robust; specialty facing headwinds; balanced portfolio management Mixed: selective pressure
Capital returnsQ1: $2.5B; Q2: $2.0B returned Q3: $1.5B returned; 2026 buybacks targeted up to $1B Normalizing
Expense trajectoryExpense ratio improvements (Q1/Q2) Reaffirmed sub‑30% GI target by 2027; operating leverage from growth and AI Positive
Strategic transactionsN/AConvex/Onex investments and Everest renewal rights—earnings/EPS/ROE accretive expectations New growth vectors
Regulatory/processN/AEU approval pending for Everest renewal rights; active elsewhere Monitoring

Management Commentary

  • “AIG had an exceptional third quarter… delivering outstanding financial results.” — Peter Zaffino, CEO .
  • “Adjusted after‑tax income per diluted share increased 77%… strength in underwriting, repositioning our investment portfolio, expense management, and disciplined capital deployment.” .
  • On deals: “We expect these transactions to be earnings, EPS and ROE accretive.” .
  • On AI: “We developed a patent‑pending approach called Autoextract… using large language models to pull specific structured information from unstructured text… making it easier to process… data that would otherwise require extensive manual effort.” .
  • On expense ratio: “We expect to achieve our target of below 30% by 2027.” — Keith Walsh, CFO .

Q&A Highlights

  • Profitability of Convex quota share and Everest renewals: management expects conversion economics at or better than AIG levels post re‑underwriting, with casualty protected by strong reinsurance structures and seeding commission tailwind; no assumption of Everest legacy liabilities .
  • Capital and liquidity: ~$5.3B parent liquidity at quarter end; 2026 repurchases up to $1B; maintain several billion of liquidity prudently .
  • Property cat reinsurance cycle: Convex is diversified; use of ILWs/cat bonds to manage volatility; AIG does not expect AALs to rise due to quota share participation .
  • Everest timing: Renewal rights already active outside EU; EU subject to regulatory approval targeted “fairly soon” .

Estimates Context

  • Q3 2025 adjusted EPS of $2.20 beat SPGI consensus of ~$1.71 by $0.49 (+29%). The beat reflected higher GI underwriting income (lower CATs, favorable PYD, expense gains) and higher NII on an APTI basis (+15% YoY to $1.024B) .
  • Reported revenue was ~$6.41B vs SPGI consensus $6.93B (-8%). Insurance “revenue” definitions vary by provider, and consensus revenue coverage was limited (2 estimates); investors should focus on underwriting profitability and AATI EPS for performance assessment.*
  • Implication: Street EPS likely revises higher on improved underwriting and investment income trajectory; revenue models may require alignment to insurer reporting frameworks.*

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Underwriting momentum: materially better combined ratio (86.8%), lower CATs and favorable PYD underpinned an EPS beat despite property pricing headwinds .
  • Structural efficiency: expense ratio improvement continues; management reaffirmed sub‑30% GI expense target by 2027, with AI deployment likely supporting operating leverage .
  • Strategic growth optionality: Everest renewal rights (~$2B GPW), Convex (equity + quota share) and Onex (AIG gaining preferred access) are positioned to be accretive and diversify earnings post close .
  • Capital discipline: buybacks normalizing to ~$1B in 2026 from elevated 2025 levels, maintaining several billion of parent liquidity and 18% debt/capital .
  • Mix management: maintain caution on property rate pressure and International expense mix, but portfolio breadth (casualty strength, NA profit resilience) and reinsurance structure mitigate volatility .
  • Watch list: EU approvals for Everest renewals; 1H’26 closing for Convex/Onex; monitoring specialty pricing softness; continued execution on AI initiatives and expense reduction .