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American International Group (NYSE:AIG) reported strong second-quarter 2025 results, with adjusted after-tax income per share increasing 56% year-over-year to $1.81, according to the company’s financial results presentation released on August 7, 2025. The insurer’s stock was down 1.51% to $77.86 in regular trading, with premarket activity showing a 1.34% decline.
Quarterly Performance Highlights
AIG delivered substantial improvement in its underwriting performance, with underwriting income reaching $626 million, a 46% increase from the prior year quarter. The calendar year combined ratio improved by 320 basis points to 89.3%, reflecting enhanced underwriting discipline and lower catastrophe losses.
As shown in the following comprehensive financial highlights chart, the company demonstrated solid growth across multiple metrics:
Net premiums written increased 1% year-over-year to $6.9 billion, while book value per share grew 8% to $74.14. Return on equity reached 11.0%, with core operating return on equity improving 290 basis points to 11.7%.
"We have tremendous momentum heading into the second half of 2025 and remain very confident in our ability to achieve our long-term financial targets while delivering exceptional value for all our stakeholders," said Peter Zaffino, AIG Chairman & CEO, in the presentation.
These results represent a significant improvement from the first quarter of 2025, when AIG reported adjusted earnings per share of $1.17 and a general insurance combined ratio of 95.8%.
Segment Performance Analysis
AIG maintains a well-diversified business portfolio across both product lines and geography, providing stability and multiple growth avenues. The following chart illustrates this diversification:
The General Insurance segment, which accounts for the majority of AIG’s business, showed strong performance with net investment income of $871 million, up from $746 million in the prior year quarter. Catastrophe losses decreased significantly to $170 million from $325 million in Q2 2024.
The detailed breakdown of General Insurance financials demonstrates the improvement in underwriting results:
North America Commercial Lines delivered particularly strong results, with net premiums written increasing 4% to $2.86 billion and underwriting income surging 58% to $301 million. The calendar year combined ratio improved 430 basis points to 85.9%.
International Commercial Lines also performed well, achieving its 9th consecutive quarter with a sub-90% combined ratio. Net premiums written increased 1% to $2.33 billion, while underwriting income grew 30% to $300 million. The calendar year combined ratio improved 270 basis points to 85.9%.
Global Personal Insurance showed improvement with underwriting income of $25 million, up 178% from $9 million in the prior year quarter. The calendar year combined ratio improved 90 basis points to 98.5%.
Investment Portfolio and Income
AIG’s investment portfolio totals $90.2 billion and maintains strong credit quality, with 94% of fixed maturity securities rated NAIC-1 or NAIC-2. The portfolio is well-diversified across asset classes, as illustrated in the following chart:
Investment income has benefited from the higher interest rate environment, with the yield on fixed maturity securities and loans increasing to 4.42% in Q2 2025, up 53 basis points from 3.89% in Q2 2024. The following chart shows the steady improvement in yields and investment income:
Net investment income on an adjusted pre-tax income basis reached $955 million in Q2 2025, representing a 9% increase year-over-year. This improvement reflects both higher yields on the fixed income portfolio and improved returns from alternative investments.
Capital Management and Balance Sheet Strength
AIG maintained its focus on disciplined capital management, returning $2.0 billion to shareholders during the quarter through $1.8 billion in share repurchases and $254 million in dividends. Over the past five quarters, the company has repurchased $9.0 billion of shares, representing 17% of shares outstanding as of March 31, 2024.
The following chart illustrates AIG’s consistent share repurchase activity and stable leverage ratio:
The company’s balance sheet remains strong, with a debt-to-capital ratio of 17.9%, well within its target range of 15-20%. AIG’s parent company liquidity stood at $4.8 billion as of June 30, 2025.
AIG’s significant insurance subsidiaries received credit rating upgrades, with S&P raising its Financial Strength Rating to ’AA-’ from ’A+’ and Moody’s upgrading to ’A1’ from ’A2’, reflecting the company’s improved financial position and operational performance.
Forward-Looking Statements
AIG’s strong second-quarter results align with the company’s previously stated goal of achieving a 20%+ EPS compound annual growth rate over the next three years. The successful execution of the AIG Next (LON:NXT) program has exceeded the $500 million annual target savings ahead of the original schedule, contributing to improved operational efficiency.
The reduction in catastrophe losses compared to both the prior year quarter ($170 million vs. $325 million) and the first quarter of 2025 ($170 million vs. $520 million) demonstrates improved risk management, though the company continues to face challenges from natural disasters and market volatility.
With its diversified business portfolio, strong underwriting performance, improving investment income, and disciplined capital management, AIG appears well-positioned to continue its positive momentum through the second half of 2025 and beyond.
Full presentation:
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