American International Group, Inc. (AIG) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A indicate strong financial management, disciplined capital returns, and positive strategic initiatives, including AI deployment and strategic investments. The company's focus on reducing expenses and achieving a 30% expense ratio by 2027, along with continued share repurchases and dividend growth, further supports a positive outlook. The Q&A session revealed confidence in expense management and strategic growth, despite some vague responses. Overall, the sentiment is positive, with strategic plans likely to drive stock price within the 2% to 8% range.
Key Financial Performance
Adjusted after-tax income per diluted share (Q4) $1.96, a 51% increase year-over-year. Reasons: Reflects consistent underwriting and operating discipline.
Underwriting income (Q4) $670 million, an increase of 48% year-over-year. Reasons: Strong new business growth, particularly in International Commercial.
Global Commercial net premiums written (Q4) Grew 3%. Reasons: Despite contraction in North America Retail Property due to reduced appetite, strong new business growth led by International Commercial (14% increase).
Accident year combined ratio as adjusted (Q4) 88.9%, 17th consecutive quarter with a sub-90% result. Reasons: Reflects consistent underwriting and operating discipline.
Calendar year combined ratio (Q4) 88.8%, an improvement of 370 basis points from the prior year quarter. Reasons: Reflects consistent underwriting and operating discipline.
Adjusted after-tax income per diluted share (Full Year 2025) $7.09, an increase of 43% year-over-year. Reasons: Reflects strong underwriting and investment income.
Adjusted after-tax income (Full Year 2025) $4 billion, an increase of 24% year-over-year. Reasons: Reflects strong underwriting and investment income.
Underwriting income (Full Year 2025) $2.3 billion, an increase of 22% year-over-year. Reasons: First year since 2008 with greater than $2 billion in underwriting income, excluding divested businesses.
Global Commercial net premiums written (Full Year 2025) $17.4 billion, an increase of 3% year-over-year. Adjusted growth: 4%. Reasons: Growth in North America Commercial (4% or 5% adjusted) and International Commercial (3%), offset by contraction in Global Personal (3%).
Expense ratio (Full Year 2025) 31.1%, down 90 basis points from the prior year. Reasons: Reflects progress in reducing expenses.
Accident year combined ratio (Full Year 2025) 88.3%. Reasons: Reflects consistent underwriting and operating discipline.
Calendar year combined ratio (Full Year 2025) 90.1%, an improvement of 170 basis points from 2024. Reasons: Reflects consistent underwriting and operating discipline.
Net investment income (Full Year 2025) $3.8 billion, an increase of 8% year-over-year. Reasons: Shift to higher-yielding assets with strong financial ratings.
Core operating ROE (Full Year 2025) 11.1%, a 200 basis point improvement year-over-year. Reasons: Reflects strong financial performance.
Capital returned to shareholders (Full Year 2025) $6.8 billion, including $5.8 billion in share repurchases and $1 billion in dividends. Reasons: Reflects disciplined capital management.
Debt outstanding (Year-end 2025) $9 billion. Reasons: Reflects disciplined financial management.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Gen AI and Data Strategies: AIG has made significant progress embedding gen AI across core underwriting and claims processes. They expanded the use of 'underwriting by AIG Assist' to 7 additional lines of business and plan to deploy it across the majority of commercial businesses in 2026. This has led to a 26% increase in submission count year-over-year in Lexington's business. They are also developing an orchestration layer to coordinate AI agents for better decision-making and cost reduction.
Special Purpose Vehicles (SPVs): AIG launched Syndicate 2479 in partnership with Amwins and Blackstone, with a stamp capacity of $300 million. This SPV is expected to generate premium growth and fee income. Gen AI capabilities were used to match data and define risk characteristics for this SPV.
Everest Portfolio Conversion: AIG acquired renewal rights for Everest's global retail insurance portfolio, expanding its global retail commercial footprint. They converted $65 million in gross premiums written in Q4 and achieved a 75% retention rate in January, reflecting $180 million in gross premiums written.
Convex Group Investment: AIG took a 35% equity interest in Convex Group and a 9.9% stake in its majority owner, Onex Corporation. They also secured a 7.5% whole account quota share of Convex's business for 2026, increasing to 10% in 2027 and 12.5% thereafter.
Underwriting Income: AIG generated $2.3 billion in underwriting income for 2025, a 22% increase year-over-year, marking the first time since 2008 that underwriting income exceeded $2 billion.
Expense Ratio Reduction: AIG reduced its expense ratio to 31.1% in 2025, down 90 basis points from the prior year, and is on track to achieve a sub-30% expense ratio by 2027.
Capital Management: AIG returned $6.8 billion to shareholders in 2025, including $5.8 billion in share repurchases and $1 billion in dividends. They also increased their quarterly dividend by 12.5%.
Corebridge Financial Sell-Down: AIG reduced its ownership in Corebridge Financial to 10.1% by the end of 2025, generating approximately $2.5 billion in gross proceeds during the year.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Market Environment: North America Retail Property contracted due to reduced appetite given the current market environment. Property markets in North America remained under pressure with increased competition in both admitted and non-admitted markets. Retail Property pricing was down 10%, and excess and surplus lines pricing was down 13% for the year.
International Financial Lines: International Financial Lines contracted 5%, and pricing was down 4%, reflecting ongoing rate pressure.
Energy Sector Pricing: Energy pricing was down 10% internationally, driven by abundant capacity, which could impact profitability in this sector.
High Net Worth Quota Share Reinsurance Treaty: Global Personal net premiums written contracted 3%, driven by higher ceded premiums under the high net worth quota share reinsurance treaty entered into at 1/1/25.
Reinsurance Market Dynamics: Although reinsurers compromised on pricing, they remained disciplined on attachment points, which could limit flexibility in reinsurance arrangements.
Expense Ratio Challenges: The expense ratio remains a focus area, with a target to reduce it below 30% by 2027. Current progress shows improvement but still requires further reductions.
Leadership Transition: The transition of leadership to a new CEO could pose risks to strategic continuity and execution of long-term objectives.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Net Premiums Written Growth for 2026: AIG expects low to mid-teens net premiums written growth in General Insurance for the full year 2026, reflecting strong momentum and growth from multiple sources.
Reinsurance Strategy for 2026: AIG achieved enhanced terms and favorable pricing in January 1 renewals, with a weighted average risk-adjusted rate decrease in property catastrophe reinsurance exceeding 15%. The company plans to continue leveraging its reinsurance strategy to minimize portfolio volatility and position itself well for 2026.
Strategic Transactions Impact on 2026 and 2027: Several strategic transactions announced in the fourth quarter of 2025 are expected to contribute to AIG's earnings, earnings per share, and return on equity in 2026, with further accretion anticipated in 2027.
Everest Portfolio Conversion: AIG is focused on converting the Everest portfolio over the next three quarters, with expectations of a 10-point benefit to the combined ratio of the converted business.
Convex Group Partnership: AIG's investment in Convex Group, including a 7.5% whole account quota share of Convex's business for 2026, is expected to be accretive to earnings within the year. The share will increase to 10% in 2027 and 12.5% in 2028 and thereafter.
Special Purpose Vehicles (SPVs): AIG plans to expand its SPV strategy, including the recently launched Syndicate 2479, which is expected to generate premium growth and fee income in 2026.
Gen AI Deployment in 2026: AIG aims to deploy its gen AI capabilities across core underwriting and claims processes, enhancing efficiency and decision-making. The company expects significant productivity gains and increased submission counts in 2026.
Expense Ratio Target: AIG remains focused on achieving a sub-30% expense ratio by 2027, with continued progress expected in 2026.
Capital Management for 2026: AIG intends to repurchase at least $1 billion of common shares in 2026, subject to market conditions, and plans to deploy proceeds from the sell-down of its remaining Corebridge position to additional share repurchases.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Dividends Paid: $1 billion in dividends returned to shareholders in 2025.
Dividend Increase: Quarterly dividend increased by 12.5%, marking the third consecutive year with a dividend increase of 10% or more.
Share Repurchases: $5.8 billion in share repurchases conducted in 2025.
Capital Return: A total of $6.8 billion returned to shareholders in 2025, including share repurchases and dividends.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:What can we expect from the expense ratio over the next few years?
A:The expense ratio is expected to be lower on a run rate basis when comparing 2026 to 2025. The company is focused on achieving an expense ratio below 30% as a top priority. The fourth quarter is seasonally high due to parent expenses and one-time items, but the full year showed minimal impact from additional expenses. The company has made significant progress in managing expenses and expects meaningful improvement in 2026.
Q:What portion of General Insurance net premium written growth is from deals versus organic growth?
A:The growth comes from a variety of sources, including core business initiatives, beneficial reinsurance at 1/1, and contributions from deals like Convex and Amwins. Organic growth is also supported by reduced session throughout 2026. No single factor is driving the outcome, and the company did not provide specific guidance on the breakdown.
Q:Can you provide more detail on the additional margin in Casualty lines?
A:The company has been conservative in its Casualty lines, raising loss cost trend assumptions to double digits since 2019. Additional margin has been added to Casualty loss picks to account for macro uncertainties like social inflation and rising litigation costs. This is not due to any deterioration in the portfolio but is intended to strengthen reserves.
Q:What caused the sequential step-up in interest and dividends within General Insurance?
A:The increase is due to active portfolio management, including turning over 40% of the portfolio to reinvest in higher yields, selling down the real estate portfolio, and cleaning up private equity secondaries. The company has transitioned from in-house to largely outsourced asset management, with Corebridge managing less than $3 billion of the $80 billion portfolio.
Q:What is the orchestration layer for AI agents, and how will it be implemented?
A:The orchestration layer will manage multiple AI agents across the organization in an orderly way to achieve scale. It will integrate with the technology stack and focus on reducing cycle time, improving data quality, and shrinking digital workflows. The company has made significant progress in AI implementation and plans to focus on orchestration in 2026.
Q:What are the low-hanging fruits and long-term opportunities in AI for the company?
A:Low-hanging fruits include reducing cycle time and improving data quality for underwriters, allowing for higher submission flow without additional human resources. Long-term opportunities involve orchestrating multiple AI agents to scale and analyze information across workflows, with a focus on regulatory compliance and technological advancements.
Q:How will the company achieve its expense ratio target of 30% by 2027?
A:The company plans to achieve the target through expense discipline, leveraging premium growth, and eliminating headwinds from parent expenses by 2026. The company has a strong track record of executing transformations and expects meaningful improvement in 2026, making the target achievable by 2027.
Q:What is the baseline for capital deployment in 2026, and how does the Corebridge stake factor in?
A:The baseline for capital deployment in 2026 is at least $1 billion, with the majority of proceeds from the Corebridge stake monetization to be used for additional share repurchases.
Q:What is the company's approach to managing the soft market and cycle management?
A:The company focuses on preparing in advance by shaping the portfolio, maintaining underwriting standards, and ensuring strong risk-adjusted returns. It monitors micro-segments and diverse markets to identify growth and margin opportunities. The company is well-positioned to manage the soft market due to its strong balance sheet, liquidity, and investment in future technologies like AI.
Q:What is the company's stance on M&A versus share repurchases?
A:The company evaluates M&A opportunities based on their potential to deliver better returns than share repurchases. Currently, the best use of proceeds from Corebridge is in share repurchases, but the company remains open to compelling investments that align with its strategic goals.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct breakdown of General Insurance net premium written growth between deals and organic growth, citing a desire to take other questions. Additionally, while discussing AI orchestration, management used broad language without specifying how localized AI systems would integrate with the orchestration layer.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI agent
AIG Assist
Accident ratio
CVC
Commercial premium
Corebridge Financial
Everest portfolio
Global Commercial
Investor Day
Lines pricing
Retail Property
attachment
conversion
credit
gen AI
income increase
income portfolio
line pricing
loss experience
majority
ontology
orchestration layer
ownership
phase
point improvement
point increase
portfolio account
progress gen
property catastrophe
purchase
quota share
role
strength
transaction
transition
travel
treaty
underwriting AIG
work
AIG Transcript
American International Group, Inc. (AIG) Q4 2025 Earnings Call Transcript
Positive2-11
The earnings call summary and Q&A indicate strong financial management, disciplined capital returns, and positive strategic initiatives, including AI deployment and strategic investments. The company's focus on reducing expenses and achieving a 30% expense ratio by 2027, along with continued share repurchases and dividend growth, further supports a positive outlook. The Q&A session revealed confidence in expense management and strategic growth, despite some vague responses. Overall, the sentiment is positive, with strategic plans likely to drive stock price within the 2% to 8% range.
American International Group, Inc. (AIG) Q3 2025 Earnings Call Transcript
Positive11-5
The earnings call highlights strong financial performance, including a significant increase in net investment income and book value per share. The company's strategic plans, such as AI initiatives and partnerships with Convex and Everest, are poised to enhance profitability and operational efficiency. The Q&A section provided clarity on strategic partnerships and liquidity, although some responses lacked specifics. Overall, the positive financial metrics, strategic initiatives, and increased shareholder returns outweigh the minor concerns, suggesting a positive stock price movement.
American International Group, Inc. (AIG) Presents At KBW Insurance Conference 2025 Transcript
Neutral9-3
American International Group, Inc. (AIG) Q2 2025 Earnings Call Transcript
Positive8-7
The earnings call reveals strong financial performance with a 17% increase in net investment income and improved combined ratios, despite some increases in certain areas. The Q&A section highlights positive sentiment towards AIG's growth potential and capital management strategy, with no significant risks identified. The strategic initiatives, including the Tata AIG partnership and GenAI deployment, further enhance growth prospects. The share repurchase plan and dividend growth also contribute to a positive outlook. Overall, these factors suggest a positive stock price movement.
AIG Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
