Key Takeaways:
AIG reported adjusted after-tax income of $2.00 per share for the second quarter, up 10% year-over-year and beating consensus, as stronger underwriting offset weaker investment income.
"AIG delivered another strong quarter, marking an exceptional first half of the year," Eric Andersen, AIG president and chief executive officer, said.
General Insurance underwriting income rose 10% to $686 million, with net premiums written up 9% to $7.5 billion. The combined ratio improved 30 basis points to 89.0%, and the accident year combined ratio, as adjusted, was 88.1%. Catastrophe losses totaled $210 million, including $75 million tied to the Middle East conflict, while favorable prior year development added $145 million.
Net income attributable to common shareholders fell to $948 million, or $1.78 per diluted share, from $1.1 billion, or $1.98, a year earlier, reflecting the sale of AIG's remaining Corebridge Financial stake for about $710 million in May. Adjusted after-tax income rose to $1.1 billion from $1.0 billion. Core operating return on equity was 11.1%, and book value per share climbed 4% to $77.39.
By segment, North America Commercial's combined ratio improved 190 basis points to 84.0%, while International Commercial deteriorated 540 basis points to 91.3% on Middle East catastrophe losses and rate pressure. Global Personal's combined ratio improved 560 basis points to 92.9%, with underwriting income jumping to $114 million from $25 million.
AIG returned $904 million to shareholders in the quarter, including $641 million in share repurchases and $263 million in dividends. The board declared a quarterly dividend of $0.50 per share, payable Sept. 30. Total debt to adjusted capital stood at 17.6%.
The company said it remains on track to cut its General Insurance expense ratio below 30 percent for full-year 2027, with the trailing 12-month ratio at 30.7 percent. Management reiterated its 2025 Investor Day financial objectives.
The earnings beat signals continued underwriting discipline as the market shifts from broad rate increases to a more selective environment. Investors will watch the second half for how AIG balances premium growth against pricing pressure in property lines.
This article is for informational purposes only and does not constitute investment advice.
