American International Group Inc. (AIG) began its 2025 financial year with robust results that exceeded market expectations. The company reported an earnings per share (EPS) of $1.17 for the first quarter, surpassing the analyst consensus of $0.99 by $0.18. This positive performance was primarily driven by lower-than-anticipated catastrophe-related costs and steady underwriting results.
Financial Highlights
AIG’s net premiums written (NPW) reached $4.5 billion for the quarter ending March 31, 2025. On a reported basis, NPW remained flat, but when adjusted for currency movements and the sale of AIG’s travel business in 2024, it showed an 8% increase. The company’s use of a ‘comparable basis’ allows for more consistent year-on-year comparisons.
Commercial Insurance Growth
Growth was particularly notable in AIG’s global commercial segment, where NPW totaled $3.2 billion. North America commercial NPW rose by 14%, while international commercial NPW increased by 8% on a comparable basis. These figures underscore the strength of AIG’s commercial insurance business.
Catastrophe Losses and Underwriting Performance
Catastrophe losses amounted to $525 million, equivalent to 9.1 percentage points on the loss ratio. Although significant, this figure compared favorably to industry trends. AIG 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.
Net Income and Adjusted After-Tax Income
Net income attributable to AIG common shareholders was $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 (AATI) was $702 million, or $1.17 per diluted share, compared to $862 million, or $1.25, in the previous year. The year-over-year decline was primarily due to increased catastrophe charges, partially offset by more favorable prior-year reserve development and reduced expenses.
Investment Strategy and Shareholder Returns
As part of its capital deployment and income strategy, AIG announced plans to increase its exposure to private assets to boost net investment income. The company intends to raise the allocation of its general insurance investment portfolio to private credit from 8% to between 12% and 15%, and increase the allocation to private equity 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.
During the quarter, AIG returned $2.5 billion to shareholders through $2.2 billion in share repurchases and $234 million in dividends. The Board approved a 12.5% increase in the quarterly dividend to $0.45 per share, marking the third consecutive year of double-digit increases.
Outlook and Strategic Plans
According to CEO Peter Zaffino, AIG remains on track to meet its 2025 targets. ‘As we look ahead, we have significant strategic and financial flexibility, exceptional momentum, and we continue to expect to achieve 10%+ Core Operating ROE for full year 2025 along with the three-year financial targets we provided at our Investor Day,’ Zaffino stated.
The company also reported that its projected full-year EPS compound annual growth rate remains above 20%, significantly higher than most sector estimates. AIG has revised several key performance targets under a new three-year strategic plan, aiming to lift its core operating return on equity to as high as 13% by 2027, up from 9.1% in 2024 and above the current-year target of 10%.
