10-Q: AIG Q3 2025 Earnings: Underwriting Soars, Strategic Investments Announced

American International Group reports strong third-quarter 2025 results with significant underwriting income growth, reduced catastrophe losses, and strategic investments in Convex and Onex.

Summary

• Net income attributable to AIG common shareholders increased by 13% to $519 million in Q3 2025, and significantly turned around from a loss of $2,324 million in YTD 2024 to a profit of $2,361 million in YTD 2025.
• Diluted EPS from continuing operations rose 25.7% to $0.93 in Q3 2025 and 57.5% to $4.08 in YTD 2025.
• Total General Insurance underwriting income surged 81% to $793 million in Q3 2025, driven by lower catastrophe losses and favorable prior year reserve development.
• Catastrophe losses significantly decreased to $100 million in Q3 2025 from $417 million in Q3 2024.
• AIG announced strategic investments including a 35% equity interest in Convex Group Limited for approximately $2.1 billion and a 9.9% ownership stake in Onex Corporation for approximately $646 million.
• The company also agreed to acquire renewal rights of Everest Group, Ltd.'s global retail commercial insurance portfolios for $301 million.
• AIG repurchased approximately 66 million shares of common stock for $5.3 billion year-to-date September 30, 2025, with $4.1 billion remaining under the current authorization as of October 30, 2025.
• Credit ratings were upgraded by S&P and Moody's for both AIG's insurance subsidiaries and AIG Parent in May and June 2025, respectively, with a stable outlook.

Sentiment

Score: 8

Explanation: The filing indicates strong financial performance with significant increases in net income and underwriting income, improved combined ratio, and favorable prior year reserve development. Strategic investments and credit rating upgrades further bolster a positive outlook. However, increased net realized losses from real estate fund impairments and a decrease in total shareholders' equity temper the overall sentiment slightly.

Positives

• Net income attributable to AIG common shareholders increased 13% to $519 million in Q3 2025 and turned around from a $2,324 million loss to a $2,361 million profit year-to-date 2025.
• Diluted EPS from continuing operations increased 25.7% to $0.93 in Q3 2025 and 57.5% to $4.08 year-to-date 2025.
• Total General Insurance underwriting income grew 81% to $793 million in Q3 2025 and 14% to $1,662 million year-to-date 2025.
• Catastrophe losses significantly decreased to $100 million in Q3 2025 from $417 million in Q3 2024, and to $795 million year-to-date 2025 from $853 million year-to-date 2024.
• Favorable prior year loss reserve development of $161 million in Q3 2025 and $169 million year-to-date 2025, a significant improvement from unfavorable development in the prior year periods.
• Combined ratio improved to 86.8% in Q3 2025 from 92.6% in Q3 2024, and to 90.6% year-to-date 2025 from 91.6% year-to-date 2024.
• S&P upgraded AIG's significant insurance subsidiaries' financial strength ratings to AAfrom A+ in May 2025.
• Moody's upgraded AIG's insurance subsidiaries' financial strength ratings to A1 from A2 in June 2025.
• S&P upgraded AIG Parent's Senior Debt Rating to Afrom BBB+ in May 2025.
• Moody's upgraded AIG Parent's Senior Debt Rating to Baa1 from Baa2 in June 2025.
• Repurchased approximately 66 million shares of common stock for $5.3 billion year-to-date September 30, 2025, demonstrating capital return to shareholders.
• Allowance for credit losses on mortgage and other loans receivable decreased to $104 million from $164 million.
• Commercial mortgages on nonaccrual status decreased to $151 million from $252 million.
• Unrealized losses on fixed maturity securities decreased to $1,984 million from $3,113 million.

Negatives

• Total net investment income decreased 21% to $772 million in Q3 2025.
• Total net realized losses increased significantly to $(490) million in Q3 2025 and to $(851) million year-to-date 2025, primarily due to impairments on investments in real estate funds and higher foreign exchange losses.
• Total AIG shareholders' equity decreased to $41,085 million from $42,521 million.
• Global Personal segment reported an underwriting loss of $22 million year-to-date 2025, compared to an income of $60 million in the prior year, partly due to the sale of a business.
• Maximum exposure to loss from unconsolidated Variable Interest Entities (VIEs) increased to $5,499 million from $4,571 million.
• Weighted average loan-to-value ratio for commercial mortgages increased to 68% from 65%.

Risks

• Impact of adverse developments affecting economic conditions, including financial market conditions, macroeconomic trends, interest rate fluctuations, inflationary pressures, and geopolitical events.
• Occurrence of catastrophic events, both natural and man-made, potentially exacerbated by climate change.
• Disruptions in information technology systems, including cyberattacks and data security breaches.
• Ability to effectively implement technological advancements, including AI, and respond to competitors' initiatives.
• Effects of changes in laws and regulations, including those related to privacy, data protection, cybersecurity, and AI.
• Concentrations in investment portfolios, including continuing equity market exposure to Corebridge Financial, Inc.
• Changes in the valuation of investments and reliance on third-party investment managers.
• Nonperformance or defaults by counterparties.
• Ability to adequately assess risk and estimate related losses, and effectiveness of enterprise risk management policies.
• Changes in judgments or assumptions concerning insurance underwriting and insurance liabilities.
• Availability of adequate reinsurance or access to reinsurance on acceptable terms.
• Changes to tax laws in the U.S. and other operating countries.
• Difficulty in retaining and recruiting key personnel and implementing succession plans.
• Actions by rating agencies with respect to credit and financial strength ratings.
• Changes in judgments concerning the recognition of deferred tax assets and impairment of goodwill.
• Ability to successfully dispose of, monetize, or acquire businesses or assets, or integrate acquired businesses.
• Ability to address evolving global stakeholder expectations and regulatory requirements regarding environmental, social, and governance matters.
• Impact of epidemics, pandemics, and other public health crises.
• Litigation and regulatory matters, which could result in material adverse effects on financial condition or results of operations.
• Potential for additional collateral calls or early termination of derivative contracts upon a downgrade of long-term senior debt ratings.

Future Outlook

AIG anticipates continued profitable growth through underwriting discipline, portfolio optimization, and strategic reinsurance partnerships. The company plans to deploy capital efficiently, including through opportunistic inorganic growth. Future investments in Onex's funds and participation in Convex's underwriting portfolio are expected to enhance capabilities and footprint. The company also expects to continue returning capital to shareholders through dividends and share repurchases, with $4.1 billion remaining under the current authorization as of October 30, 2025. The new U.S. tax legislation is not expected to have a material impact on results.

Management Comments

• Our investment strategies are tailored to the specific business needs of each segment by targeting an asset allocation mix that supports estimated cash flow needs of our outstanding liabilities and provides diversification from an asset class, sector, issuer, and geographic perspective.
• The primary objectives are generation of investment income, preservation of capital, liquidity management and growth of surplus.
• We believe that we have sufficient liquidity and capital resources to satisfy future requirements and meet our obligations to policyholders, customers, creditors and debt-holders, including those arising from reasonably foreseeable contingencies or events.
• Our fundamental strategy across the portfolios is to seek investments with similar duration and cash flow characteristics to the associated insurance liabilities to the extent practicable.
• We seek to purchase investments that offer enhanced yield through illiquidity premiums, such as private placements and commercial mortgage loans, which also add portfolio diversification.
• General Insurance seeks to differentiate itself in the markets where we participate by providing leading expertise and insight to clients, distribution partners and other stakeholders, delivering underwriting excellence and value-driven insurance solutions and providing high quality, tailored end-to-end support to stakeholders.
• We leverage our world-class global franchise, multinational capabilities, balance sheet strength and financial flexibility.

Industry Context

AIG operates in a highly competitive global insurance market, facing challenges from fluctuating interest rates, currency volatility, and the impact of social and economic inflation on claims. The company's strategic focus on underwriting excellence, reinsurance optimization, and targeted profitable growth aligns with broader industry trends emphasizing risk-adjusted returns and capital efficiency. Recent credit rating upgrades position AIG favorably against competitors, reflecting improved financial strength. The announced strategic investments in Convex and Onex, along with the acquisition of Everest's renewal rights, indicate a proactive approach to expanding specialty insurance capabilities and asset management, diversifying its portfolio, and strengthening its market position amidst ongoing industry consolidation and technological shifts, including the increasing relevance of AI.

Comparison to Industry Standards

• AIG's combined ratio of 86.8% in Q3 2025 and 90.6% YTD 2025 demonstrates strong underwriting profitability, generally outperforming many industry peers who often target combined ratios in the low to mid-90s for commercial lines. For example, a combined ratio below 90% is considered excellent in the P&C industry.
• The significant reduction in catastrophe losses in Q3 2025 ($100 million vs $417 million in Q3 2024) suggests effective reinsurance optimization and risk management, which is a key differentiator in an industry increasingly exposed to climate-related events.
• The credit rating upgrades by S&P (AAfrom A+) and Moody's (A1 from A2) for AIG's insurance subsidiaries place them among the highest-rated insurers, comparable to industry leaders like Chubb (AA by S&P, A++ by AM Best) or Travelers (A+ by S&P, A++ by AM Best), indicating superior financial strength and claims-paying ability.
• The strategic investments in Convex Group, a global specialty insurer, and Onex Corporation, an asset manager, reflect a trend among large insurers to diversify revenue streams and enhance investment capabilities, similar to moves by companies like AXA or Allianz in expanding their asset management arms or specialty underwriting presence.
• The share repurchase program of $5.3 billion YTD 2025 is a substantial capital return, signaling confidence in capital generation and efficient capital management, a practice common among mature, profitable insurers.

Management Changes

Corporate Governance

Legal Proceedings

• Subject to regulatory and government investigations, actions, and litigation in various domestic and foreign jurisdictions, with potential for significant jury awards, settlements, punitive damages, or other penalties.
• Litigation and arbitration concerning insurance and reinsurance contract coverage are generally considered in loss reserves.
• AIG Parent and subsidiaries are subject to legal proceedings alleging breach of contractual/fiduciary duties, bad faith, indemnification, and violations of federal/state statutes.
• Management does not believe any charges from legal proceedings are likely to have a material adverse effect on financial position or results of operation.
• Currently under examination by the IRS for tax years 2011-2019 and engaging in IRS Appeals for 2007-2010.

Related Party Transactions

• Reinsurance transactions with Fortitude Re, where AIG maintains ownership of supporting investments and has a funds withheld payable.
• AIG's retained interest in Corebridge Financial, Inc. (15.5% as of September 30, 2025) is reflected as an equity method investment, with dividends and stock price changes recognized in Net investment income.
• AIG continues to guarantee certain policyholder contracts issued by Corebridge subsidiaries and certain debt issued by Corebridge Life Holdings, Inc., with Corebridge indemnifying AIG for related liabilities.

Stakeholder Impact

• Shareholders: Positive impact from increased net income, strong underwriting performance, credit rating upgrades, and significant share repurchases. Potential for further capital returns. Strategic investments could drive future growth.
• Employees: John Neal's appointment as President, AIG, indicates leadership changes. Amendments to incentive plans aim to strengthen pay-for-performance culture. Restructuring costs in prior periods suggest ongoing efficiency initiatives.
• Customers: Improved financial strength ratings for insurance subsidiaries enhance confidence in AIG's ability to pay claims. Expansion into specialty insurance and acquisition of renewal rights could broaden product offerings and service capabilities.
• Creditors: Credit rating upgrades for AIG Parent and insurance subsidiaries reduce perceived credit risk, potentially lowering future borrowing costs.
• Suppliers: No direct impact mentioned, but overall financial health and strategic growth could lead to stable or increased business opportunities.

Next Steps

• Close secondary public offering of Corebridge common stock on November 6, 2025.
• Pay cash dividend of $0.45 per share on December 30, 2025, to shareholders of record on December 16, 2025.
• John Neal to start as President, AIG on or about December 1, 2025.
• Strategic investments in Convex Group Limited and Onex Corporation expected to close in the first half of 2026, subject to regulatory approvals.
• AIG will participate directly in Convex's underwriting portfolio through a whole account quota share structure from January 1, 2026.
• AIG intends to invest up to $2.0 billion over three years in Onex's investment funds.
• AIG will pay Everest affiliates $10 million per month for nine months for specified transition services related to the renewal rights acquisition.
• Assess the impact of new FASB accounting standards on disaggregation of income statement expenses (effective after December 15, 2026) and improvements to internal-use software (effective after December 15, 2027).
• Continue to monitor the recoverability of deferred tax assets, with a potential release of valuation allowance as early as Q4 2025.

Key Dates

Recommendation

The filing demonstrates a robust financial turnaround with a significant shift from a net loss to a substantial profit year-over-year, driven by strong underwriting performance and reduced catastrophe losses. The improved combined ratio and favorable prior year reserve development highlight operational efficiency and effective risk management. Multiple credit rating upgrades by S&P and Moody's underscore enhanced financial strength and stability. Furthermore, the aggressive share repurchase program signals management's confidence and commitment to returning capital to shareholders. Strategic investments in Convex and Onex, coupled with the acquisition of Everest's renewal rights, indicate a clear path for future growth and diversification in key insurance and asset management segments. While some investment losses were noted, the overall trajectory and strategic moves position AIG for continued strong performance, making it an attractive 'strong buy' for long-term investors.

Keywords

AIG, American International Group, Insurance, Financial Services, SEC Filing, 10-Q, Quarterly Report, Earnings, Underwriting Income, Catastrophe Losses, Corebridge, Share Repurchase, Credit Ratings, Convex Group, Onex Corporation, Everest Group, Reinsurance, Commercial Insurance, Personal Insurance, Investment Income, EPS, Risk Management