American International Group Inc. (AIG) began its 2025 financial year with stronger-than-expected results, reporting an earnings per share (EPS) of $1.17. This figure surpassed the analyst consensus of $0.99 by $0.18, driven primarily by lower-than-anticipated catastrophe-related costs and steady underwriting results.
Financial Highlights
The group reported net premiums written (NPW) of $4.5 billion for the quarter ending March 31, remaining flat on a reported basis but increasing by 8% when adjusted for currency movements and the 2024 sale of AIG’s travel business. Growth was particularly notable in the global commercial segment, where NPW reached $3.2 billion. North America commercial NPW rose by 14%, while international commercial NPW increased by 8% on a comparable basis.
AIG experienced catastrophe losses of $525 million, equivalent to 9.1 percentage points on the loss ratio. However, this outcome compared favorably to industry trends. The company reported a general insurance combined ratio of 95.8%, while the accident year combined ratio, adjusted to exclude catastrophe events, stood at 87.8% – its lowest for a first quarter since the global financial crisis.
Strategic Developments
As part of its capital deployment and income strategy, AIG announced plans to increase its exposure to private assets to grow net investment income. The company intends to raise its general insurance investment portfolio allocation to private credit from 8% to between 12% and 15%, and increase its private equity allocation from 5% to a target range of 6% to 8%.
Investment income totaled $1.1 billion, a 13% increase from the prior year, supported 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.
Shareholder Returns and Outlook
AIG returned $2.5 billion to shareholders during the quarter, comprising $2.2 billion in share repurchases and $234 million in dividends. The Board approved a 12.5% rise in the quarterly dividend to $0.45 per share, marking the third consecutive year of double-digit increases. Book value per share reached $71.38, and parent company liquidity ended the quarter at $4.9 billion.
CEO Peter Zaffino stated that the company remains on track to meet its 2025 targets, highlighting ‘significant strategic and financial flexibility, exceptional momentum.’ AIG continues to expect to achieve a Core Operating ROE of 10%+ for full-year 2025, along with its three-year financial targets presented at Investor Day. The firm’s projected full-year EPS compound annual growth rate remains above 20%, significantly higher than most sector estimates.
