AIG delivers strong Q2, addresses Russian-held aviation losses

AIG delivered a strong second quarter, with adjusted after-tax income per diluted share surging 56% year-over-year to $1.81per share, compared to $1.16 per share in the prior quarter. The insurer posted net income of $1.1 billion, up from a $4 billion loss the previous year, thanks to higher underwriting income, robust investment returns, and tight capital management. CEO Peter Zaffino attributed the performance to disciplined execution, improvements in underwriting profitability and expense control, and the successful completion of its cost-cutting AIG Next initiative.

Zaffino addressed recent rulings about aviation losses related to Russian-held aircraft. He noted that AIG prudently reserved for these complex claims and said recent rulings and settlements were consistent with AIG's expectations. The High Court in London ruled that insurers must carry out claims made by aircraft lessors for commercial jets impounded by Russia in the wake of its 2022 invasion of Ukraine

Zaffino said the company is scaling generative AI tools across underwriting and claims. Initial rollouts, such as AIG Underwriter Assist, have significantly improved processing efficiency, and the company plans a broader deployment across commercial lines in 2026.

Quarterly Snapshot:

• Adjusted after-tax income per diluted share rose to $1.81, a 56% year-over-year increase
• Net premiums written totaled $6.9 billion (up 1% on a comparable basis)
• General Insurance underwriting income jumped 46% to $626 million
• Combined ratio improved to 89.3%; AYCR rose slightly to 88.4%
• Net investment income increased 48% to $1.5 billion
• AIG returned $2.0 billion to shareholders, including $1.8 billion in repurchases
• Core operating ROE reached 11.7%; book value per share rose to $74.14
• General Insurance net premiums written grew 6% on a comparable basis, with a significant 11% growth in North America Commercial Lines.
• A favorable accident year combined ratio (AYCR) of 88.3% underscores disciplined underwriting and risk management.
• AIG returned $1.8 billion to shareholders in Q3, reinforcing its commitment to shareholder value.
• The adjusted after-tax income per diluted share increased by 18% year-over-year, reflecting underlying operational strength and efficient capital management.

Management Perspective:

Zaffino noted strong momentum heading into the second half of 2025. He emphasized the success of the AIG Next initiative, which delivered more than $500 million in run-rate savings, the rollout of Gen AI platforms across underwriting and claims, and continued progress in strengthening capital discipline.

"We've executed against our strategy with precision, while absorbing expenses and investing in digital transformation," he said during a Thursday morning investor conference call. "This quarter’s results reinforce the strength of our core business."

Zaffino emphasized AIG’s robust performance in Global Commercial Lines, and highlighted ongoing underwriting and capital management discipline.

“AIG reported General Insurance net premiums written of $6.4 billion, a slight decrease of 1% on a reported basis, yet reflecting a 6% increase on a comparable basis,” he said. “This growth was largely driven by the Global Commercial Lines segment, which saw a reported decrease of 2% but a 7% growth on a comparable basis, with North America Commercial Lines leading the charge with an 11% increase. AIG’s new business efforts also paid off, with $1.1 billion in new business, marking a 9% year-over-year rise in Global Commercial Lines.”

By The Numbers:

• Total Revenue: Adjusted pre-tax income of $1.391 billion
• Net Income: $1.1 billion (up from -$4.0 billion in Q2 2024)
• EPS: Adjusted after-tax income per diluted share of $1.81
• Share Repurchases: $1.8 billion in Q2 2025
• Dividend Declared: $254 million in Q2 2025 ($0.45 per share)
• Stock Price Movement: AIG shares, which have risen nearly 10% in the last year, was down slightly in early Thursday trading, to $77.27 per share.

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].