10-K: AIG Reports Strong 2025 Performance with Underwriting Gains & Capital Returns

American International Group, Inc. (AIG) delivered robust financial results in 2025, marked by significant underwriting income growth, substantial capital returns to shareholders, and strategic investments.

Summary

• Net income attributable to AIG common shareholders per diluted share increased to $5.43 in 2025, a significant improvement from a loss of $2.17 in 2024.
• Adjusted after-tax income attributable to AIG common shareholders per diluted share rose by 43% to $7.09.
• Underwriting income increased by 22% to $2.3 billion, contributing to a strong combined ratio of 90.1.
• The company achieved a Return on equity of 7.5% and a Core operating return on equity of 11.1%.
• Approximately $6.8 billion of capital was returned to shareholders in 2025, comprising $5.8 billion in stock repurchases and $1.0 billion in AIG Common Stock dividends, reducing outstanding shares by 11%.
• AIG acquired the renewal rights of Everest Group, Ltd.'s global retail commercial insurance portfolios for an aggregate purchase price of $301 million.
• Strategic investments were announced in Convex Group Limited (35% equity interest for $2.1 billion) and Onex Corporation (9.9% ownership stake for $646 million, with an intent to invest up to $2 billion in Onex's funds).
• A strategic collaboration was announced with Amwins Group, Inc. and Blackstone Inc. to form Lloyds Syndicate 2479.
• Favorable prior year loss reserve development of $548 million was recognized.
• Catastrophe losses decreased to $920 million in 2025 from $1,178 million in 2024.
• Net premiums written decreased by 1% to $23.675 billion in 2025.
• Net investment income slightly decreased by $40 million, primarily due to lower gains on fair value changes and Corebridge share sales.
• Net realized losses increased by $654 million, mainly driven by impairments on real estate funds and higher losses on derivative and hedge activity.
• A valuation allowance release of $300 million related to U.S. federal consolidated tax attribute carryforwards was recorded in the fourth quarter of 2025.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a very positive filing, reflecting strong operational improvements, significant capital returns, and strategic moves that enhance long-term positioning, despite some minor headwinds in net investment income and specific segment performance.

Positives

• Net income attributable to AIG common shareholders per diluted share significantly improved to $5.43 in 2025 from a loss of $2.17 in 2024.
• Adjusted after-tax income attributable to AIG common shareholders per diluted share increased by 43% to $7.09.
• Underwriting income grew by 22% to $2.3 billion, demonstrating strong operational performance.
• The combined ratio improved to 90.1, indicating enhanced underwriting profitability.
• Core operating return on equity reached 11.1%, reflecting efficient capital utilization in core businesses.
• A substantial $6.8 billion was returned to shareholders, including $5.8 billion in stock repurchases and $1.0 billion in dividends, leading to an 11% reduction in outstanding shares.
• Financial strength ratings of AIG's significant insurance subsidiaries were upgraded by Fitch, S&P, and Moody's, and affirmed with a positive outlook by A.M. Best.
• AIG Parent's Senior Debt Rating was upgraded by S&P and Moody's, and affirmed with a stable outlook by Fitch.
• Strategic acquisition of Everest Group, Ltd.'s global retail commercial insurance portfolios enhances market position.
• Strategic investments in Convex Group Limited and Onex Corporation are expected to diversify capabilities and returns.
• Favorable prior year loss reserve development of $548 million contributed positively to results.
• Catastrophe losses decreased by $258 million compared to the prior year, indicating better risk management or lower event severity.

Negatives

• Net premiums written experienced a slight decrease of 1% in 2025.
• Net investment income decreased by $40 million, primarily due to lower gains on fair value changes, reduced gains on Corebridge share sales, and lower Corebridge dividends.
• Net realized losses increased by $654 million, mainly driven by impairments on real estate funds and higher losses on derivative and hedge activity.
• The Global Personal segment's net premiums written decreased by 12%, largely due to the sale of the global individual personal travel insurance and assistance business and changes in reinsurance structure for U.S. high net worth.
• Global Personal segment's underwriting income decreased by 51% to $70 million, with its combined ratio increasing by 1.0 point to 99.0.
• North America Commercial and International Commercial segments experienced higher accident year loss ratios, as adjusted, due to changes in business mix and reapportionment of corporate expenses.

Risks

• Deterioration of economic conditions, geopolitical tensions, changes in market conditions or weakening global capital markets.
• The amount and timing of insurance liability claims are difficult to predict and such claims may exceed the related liability for unpaid losses and loss adjustment expenses.
• Reinsurance may be unavailable or too expensive relative to its benefit and may not be adequate to protect against losses.
• Consolidated results of operations, liquidity, financial condition and ratings are subject to the effects of natural and man-made catastrophic events as well as mass torts.
• Climate change may adversely affect business and financial condition.
• Concentration of insurance, reinsurance and other risk exposures may have adverse effects.
• Losses due to nonperformance or defaults by counterparties may materially and adversely affect the value of investments, profitability and sources of liquidity.
• Investment portfolio is concentrated in certain segments of the economy, and its performance and value are subject to a number of risks and uncertainties.
• Reliance on investment management and advisory arrangements with third-party investment managers.
• Valuation of investments involves application of methodologies and assumptions to derive estimates, which may differ from actual experience.
• AIG Parent's ability to access funds from subsidiaries is limited, and liquidity sources may be insufficient.
• Inability to generate cash to meet needs due to illiquidity of some investments.
• A downgrade by one or more rating agencies in Insurer Financial Strength ratings or credit ratings.
• Risk management policies, standards and procedures may prove to be ineffective.
• Pricing for products is subject to ability to adequately assess risks and estimate related losses.
• Exposure to risks if unable to maintain availability of critical technology systems and data and safeguard confidentiality and integrity of data (cybersecurity risk).
• Development and use of new technology, such as generative artificial intelligence, may present risks.
• Foreign operations expose to risks (elevated climate risks, regional economic downturns, currency fluctuations, geopolitical events, sanctions, etc.).
• Third parties relied upon for business and administrative services may not perform as anticipated.
• Difficulty in marketing and distributing products through current and future distribution channels.
• Restructuring initiatives may not yield expected reductions in expenses and/or improvements.
• Strategic transactions, including acquisitions and dispositions, may expose to certain risks.
• Subject to risks from continuing equity market exposure to Corebridge; anticipated benefits of sales may not be achieved.
• Significant legal or regulatory proceedings may adversely affect business.
• Scrutiny and evolving expectations from investors, customers, regulators, policymakers and other stakeholders regarding environmental, social, governance and sustainability matters.
• Inability to protect intellectual property and potential for infringement claims.
• Businesses are heavily regulated and changes in laws and regulations may affect operations, increase capital requirements or reduce profitability.
• New laws and regulations or new interpretations of current laws and regulations, both domestically and internationally.
• An ownership change could limit ability to utilize tax loss and credit carryforwards.
• New and proposed changes to tax laws could increase corporate taxes.
• Estimates or assumptions used in financial statements and modeled results may differ materially from actual experience.
• Changes in accounting principles and financial reporting requirements.
• If businesses do not perform well and/or estimated fair values decline, may be required to recognize an impairment of goodwill or establish an additional valuation allowance against deferred income tax assets.
• Employee error and misconduct may be difficult to detect and prevent.
• Competition for employees is intense, and managing key employee succession is critical.
• Intense competition in each business line, and technological changes may present new and intensified challenges.

Future Outlook

AIG expects the U.S. and international laws and regulations applicable to its regulated entities to continue to evolve. The company intends to continue growing its business in strategic foreign markets and plans to allocate up to $2 billion to separately managed accounts (SMAs) and funds managed by CVC, with an initial $1 billion to be deployed through 2026. Future dividend payments and share repurchases will be at the Board's discretion, dependent on market conditions, strategic plans, financial health, and regulatory considerations. AIG will continue to actively monitor and adapt to the evolving regulatory landscape concerning climate change and other sustainability topics, and expects to access debt and preferred equity markets as needed for funding.

Management Comments

• "Generated Net income attributable to AIG common shareholders per diluted share of $5.43 and Adjusted after-tax income attributable to AIG common shareholders per diluted share of $7.09, an increase of 43 percent from the prior year."
• "Delivered $2.3 billion of underwriting income, a 22 percent increase from the prior year."
• "Produced strong combined ratio of 90.1."
• "Achieved Return on equity of 7.5 percent and Core operating return on equity of 11.1 percent."
• "Returned approximately $6.8 billion of capital to shareholders in 2025 through approximately $5.8 billion of stock repurchases, reducing outstanding shares by 11 percent, and approximately $1.0 billion in AIG Common Stock dividends."
• "Received upgrades to financial strength ratings of AIGs significant insurance subsidiaries by Fitch, S&P and Moody's and affirmation by A.M. Best."
• "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."
• "We believe that our General Insurance companies maintain adequate financial resources to meet the actual required payments under these obligations."
• "Management does not believe that any such charges are likely to have a material adverse effect on our financial position or results of operation."
• "We consider our foreign earnings with respect to certain operations in Canada, South Africa, Japan, Latin America, Bermuda as well as the European, Asia Pacific and Middle East regions to be indefinitely reinvested."
• "The OBBB Act does not have a material impact on our results of operations."
• "After factoring in multiple data points and assessing the relative weight of all positive and negative evidence, we concluded that the cumulative positive evidence outweighs the negative evidence regarding the likelihood that our U.S. federal consolidated income tax group tax attribute carryforwards will be realized and that the beginning of year valuation allowance should be released."

Industry Context

StockSavvy.ai notes that AIG's strong underwriting performance and improved combined ratio of 90.1 demonstrate effective risk selection and pricing discipline in a competitive global insurance market. The strategic investments in specialty insurer Convex and asset manager Onex, alongside the formation of Lloyds Syndicate 2479, align with broader industry trends of insurers seeking to optimize capital, diversify revenue streams, and enhance specialized underwriting capabilities. The company's focus on human capital management, including talent development and an inclusive culture, is crucial for retaining expertise in a talent-scarce industry. The explicit mention of AI risks and climate change adaptation reflects increasing regulatory and operational challenges faced by the entire insurance sector, highlighting AIG's proactive stance in these evolving areas.

Comparison to Industry Standards

• AIG's combined ratio of 90.1% is generally considered excellent in the property and casualty insurance industry, often outperforming many global peers who may struggle to consistently achieve sub-95% ratios. For example, while some top-tier global insurers like Chubb or Travelers might achieve similar or slightly better ratios in specific segments, AIG's overall improvement indicates strong operational efficiency and underwriting discipline across its diverse portfolio.
• The Core operating return on equity of 11.1% is a solid performance, especially for a large, diversified insurer. This metric is often compared to global benchmarks like the average ROE for S&P 500 Property & Casualty Insurance Index companies, which can fluctuate but typically aims for double-digit returns. AIG's figure suggests effective capital deployment and profitability relative to its core business.
• The significant capital return of $6.8 billion to shareholders, including an 11% reduction in outstanding shares, demonstrates a strong commitment to shareholder value, often exceeding the capital return intensity of some competitors who may prioritize growth or debt reduction more heavily.
• The upgrades in financial strength ratings by S&P, Moody's, and Fitch, and the positive outlook from A.M. Best, indicate a strengthening financial position relative to industry benchmarks, suggesting improved solvency and claims-paying ability compared to many global insurers.

Management Changes

Corporate Governance

Legal Proceedings

• AIG is subject to regulatory and government investigations and actions, and litigation and other forms of dispute resolution in various domestic and foreign jurisdictions.
• Certain matters involve potentially significant risk of loss due to potential for significant jury awards and settlements, punitive damages or other penalties.
• Many matters are highly complex and may seek recovery on behalf of a class or similarly large number of plaintiffs.
• Management does not believe that any such charges are likely to have a material adverse effect on the financial position or results of operation.
• AIG is currently under examination by the IRS for the tax years 2011 through 2019.
• AIG continues to engage in the IRS Appeals process for certain disagreed issues related to tax years 2007 through 2010.

Related Party Transactions

• Reinsurance transactions between AIG and Fortitude Re are structured as modified coinsurance (modco) and loss portfolio transfer arrangements with funds withheld. AIG has a funds withheld payable to Fortitude Re and a reinsurance asset.
• Nippon Life Insurance Company (Nippon) agreed to waive the transfer restriction set forth in the Stock Purchase Agreement, dated May 16, 2024, by and among AIG, Nippon and Corebridge, pursuant to which AIG was restricted from owning less than 9.9 percent of Corebridge's issued and outstanding common stock at any time prior to December 9, 2026.
• AIG continues to guarantee certain policyholder contracts issued by Corebridge subsidiaries as well as certain debt issued by Corebridge Life Holdings, Inc. (CRBGLH). Corebridge must indemnify AIG for these guarantees.

Stakeholder Impact

• Shareholders benefited from significant capital returns ($6.8 billion in 2025, including $5.8 billion in repurchases and $1.0 billion in dividends), resulting in an 11% reduction in outstanding shares and improved EPS. Positive financial performance and rating upgrades enhance shareholder confidence.
• Employees are impacted by restructuring initiatives designed to reduce operating expenses and improve efficiency. The company emphasizes human capital management, competitive compensation, benefits, health/wellness programs, and talent development.
• Customers benefit from AIG's world-class underwriting and claims expertise, global reach, and balance sheet strength. The acquisition of Everest's retail commercial portfolios and strategic partnerships aim to provide differentiated service and value-driven insurance solutions.
• Creditors/Debt-holders benefited from upgrades to AIG Parent's credit ratings, indicating improved ability to meet obligations. Debt repurchases reduced overall debt.
• Regulatory Authorities receive ongoing compliance efforts and disclosures related to financial condition, corporate governance, risk management (including cybersecurity and AI), and sustainability. Rating upgrades reflect positive regulatory standing.

Next Steps

• AIG intends to allocate up to $2 billion to SMAs and funds managed by CVC, with an initial $1 billion to be deployed through 2026.
• The Board of Directors declared a cash dividend of $0.45 per share, payable on March 30, 2026, to shareholders of record on March 16, 2026.
• AIG Parent repurchased approximately 2 million shares of AIG Common Stock for $125 million from January 1, 2026, to February 6, 2026, under an Exchange Act Rule 10b5-1 repurchase plan.
• AIG will participate directly in Convex's underwriting portfolio through a whole account quota share structure from January 1, 2026.
• The company will continue to actively monitor the regulatory landscape surrounding climate change and other sustainability topics.
• The company expects to access the debt and preferred equity markets from time to time to meet funding requirements as needed.
• The FASB new guidance on disaggregation of income statement expenses is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.
• The FASB targeted improvements to modernize accounting for software development costs are effective for annual periods beginning after December 15, 2027.

Key Dates

Recommendation

AIG's 2025 performance demonstrates a significant turnaround, with a return to strong profitability, substantial underwriting gains, and an improved combined ratio. The aggressive capital return program, including share buybacks and increased dividends, signals management's confidence and commitment to shareholder value. Upgrades in financial strength and credit ratings further de-risk the investment. Strategic acquisitions and partnerships position the company for future growth and efficiency. While some segments show minor declines in premiums or increased net realized losses, the overall trajectory and core operating metrics are highly favorable, suggesting a compelling investment opportunity for long-term growth and value creation.

Keywords

Insurance, Financial Services, Property & Casualty, Reinsurance, Capital Management, Share Repurchase, Dividends, Underwriting, Risk Management, SEC Filing, 10-K, AIG, Corebridge, Everest Group, Convex Group, Onex Corporation, Cybersecurity, AI, Climate Change, ESG, Financial Performance, Strategic Investments, Corporate Governance