American International Group (AIG) kicked off its 2025 financial year with impressive results, surpassing market expectations. The company reported earnings per share (EPS) of $1.17 for the first quarter, which is $0.18 higher than the analyst consensus of $0.99. This strong performance was mainly due to lower-than-expected costs from disasters and solid underwriting results.
For the quarter ending March 31, AIG’s net premiums written (NPW) stood at $4.5 billion. This figure remained flat compared to previous reports but showed an 8% increase when adjusted for currency changes and the sale of AIG’s travel business in 2024. The company’s growth was particularly strong in the global commercial segment, where NPW reached $3.2 billion. Notably, commercial business in North America rose by 14%, while international commercial increased by 8%.
In terms of losses, AIG faced $525 million in catastrophe losses, which accounted for 9.1 percentage points of its loss ratio. Despite these losses, AIG’s general insurance combined ratio was 95.8%. The adjusted accident year combined ratio, which excludes catastrophe events, was 87.8%, marking the lowest level for a first quarter since the global financial crisis.
However, net income attributable to AIG common shareholders saw a decline, dropping to $698 million, or $1.16 per diluted share, down from $1.2 billion, or $1.74 per diluted share, in the same period last year. Adjusted after-tax income was $702 million, or $1.17 per diluted share, compared to $862 million, or $1.25 per diluted share, from the previous year. This decline was linked to higher catastrophe charges, although it was partially offset by favorable developments from prior-year reserves and reduced expenses.
AIG is also making strategic changes to boost its investment income. The company plans to increase its allocation to private assets within its general insurance investment portfolio—from 8% to between 12% and 15%. Additionally, it aims to raise its private equity allocation from 5% to a target range of 6% to 8%.
Investment income reached $1.1 billion, reflecting a 13% increase from the previous year, driven by gains in equity positions and available-for-sale fixed income securities. On an adjusted pre-tax income basis, investment income remained stable at $845 million. AIG returned $2.5 billion to shareholders during the quarter, which included $2.2 billion in stock buybacks and $234 million in dividends. The Board has also approved a 12.5% increase in the quarterly dividend to $0.45 per share, marking the third consecutive year of double-digit increases.
AIG’s CEO, Peter Zaffino, expressed confidence in the company’s direction, stating they are on track to meet their targets for 2025. He highlighted the company’s strong strategic and financial position, anticipating a core operating return on equity of over 10% for the full year. Zaffino also noted that AIG’s projected full-year EPS compound annual growth rate remains above 20%, significantly exceeding most estimates in the sector.
AIG has revised its key performance targets under a new three-year strategic plan, aiming to increase its core operating return on equity to as high as 13% by 2027, up from 9.1% in 2024.
As AIG continues to strengthen its financial position, many are left wondering if this positive trend will sustain throughout 2025.