American International Group (NYSE:AIG) reported third-quarter adjusted after-tax income of $1.1 billion, or $2.06 per diluted share, as growth in underwriting income and net investment income helped offset a less favorable catastrophe-loss comparison with the prior-year period.
Core operating return on equity was 11.1% for the quarter, while underwriting income totaled $564 million. The insurer’s accident-year underwriting income excluding catastrophes rose 6% year over year to $756 million, and its accident-year combined ratio excluding catastrophes was 88.4%.
“In the third quarter, AIG delivered strong profitability and premium growth, reflecting the benefits of our diverse global portfolio,” President and CEO Eric Andersen said during the company’s earnings call.
Premium Growth Slows as AIG Prioritizes Underwriting Discipline
Net premiums written increased 8% from the prior-year quarter on a constant-dollar basis, or 10% excluding North America property. Global Commercial Insurance premiums rose 7%, including a 2% increase in North America Commercial Insurance and a 13% increase in International Commercial Insurance. Global Personal Insurance premiums increased 9%, driven by high-net-worth and accident-and-health businesses.
For the first nine months of 2026, AIG said net premiums written grew 11%, underwriting income exceeded $2 billion, and the calendar-year combined ratio improved 140 basis points to 89.2%.
However, Andersen said the company is stepping back from the low- to mid-teens full-year premium-growth expectation it communicated in February, citing deterioration in certain markets. He said AIG expects an “excellent year of growth” but will not pursue premium expansion at the expense of adequate returns.
During the question-and-answer session, Andersen said there was no specific fourth-quarter issue driving the changed outlook. “We see the fourth quarter pretty similar to the third quarter,” he said, while noting that market conditions remain competitive in some lines.
AIG described heightened competition in Lexington’s North American excess-and-surplus property and casualty businesses, particularly for large accounts. The company said it has directed growth toward middle-market and small- and medium-enterprise customers while reducing participation in property and casualty large accounts facing the greatest pricing pressure.
North America Commercial renewal pricing excluding property increased 5% year over year, according to Chief Financial Officer Keith Walsh. International Commercial renewal pricing declined 3%, though that was less severe than the 6% decline reported in the preceding quarter.
Segment Margins Reflect Portfolio Mix and Underwriting Actions
The company’s general insurance accident-year combined ratio excluding catastrophes increased 10 basis points from a year earlier. AIG’s expense ratio improved 30 basis points to 30.6%, helped by a 50-basis-point improvement in its general operating expense ratio to 12.4%.
Walsh said the improvement reflected operating leverage and expense discipline. AIG expects its full-year 2026 expense ratio to be about 30.5% and said it remains on track to reduce the general insurance expense ratio below 30% for full-year 2027, subject to market conditions.
- North America Commercial: The accident-year combined ratio excluding catastrophes was 87.2%, up 180 basis points year over year. The result reflected a shift toward casualty business, reduced property exposure and continued pricing pressure, primarily in property.
- International Commercial: The accident-year combined ratio excluding catastrophes improved 20 basis points to 85.8%. Expense-ratio improvement more than offset pressure on the loss ratio from rate declines.
- Global Personal: Underwriting income increased 44% year over year to $114 million. The accident-year combined ratio excluding catastrophes improved 190 basis points to 93.6%, aided by continued improvement in U.S. high-net-worth business and portfolio actions.
Total catastrophe charges were $283 million in the quarter, largely related to severe convective storms in North America and including $40 million of additional development related to the Middle East conflict. AIG reported $91 million of favorable prior-year development, compared with $180 million in the prior-year quarter.
Andersen said loss-cost trends in U.S. casualty have not eased materially. He cited social inflation, litigation finance and other factors as continuing drivers of the need for rate increases.
Investment Income, Capital Returns and Balance Sheet
Total net investment income on an adjusted pre-tax basis was $1.1 billion, up 5% from a year earlier. General insurance net investment income rose 9% to $1 billion, supported by reinvestment of fixed-income assets at higher yields.
The annualized yield on AIG’s global core fixed-income portfolio reached 4.86%, up 28 basis points from the prior-year quarter. The average new-money yield on fixed maturities and loans was 5.6%, approximately 125 basis points above sales and maturities.
Walsh said nearly 90% of the core fixed-income portfolio has turned over during the past two years, accounting for more than two-thirds of net investment income growth. Alternative investment income was $91 million, driven by private-equity performance, while other investment income was $75 million.
AIG returned $787 million to shareholders during the quarter, consisting of $527 million in share repurchases and $260 million in dividends. Through the first nine months, capital returns totaled $2.5 billion, including $1.7 billion in buybacks and $764 million in dividends.
The company expects fourth-quarter repurchases to be similar to the third-quarter level, which would bring full-year share repurchases to approximately $2.2 billion, subject to market conditions.
Adjusted book value per share was $81.25 at Sept. 30, up 5% from a year earlier, while adjusted tangible book value per share rose 5% to $73.37. AIG also issued approximately €1.3 billion equivalent of euro-denominated senior notes in September to pre-fund a 2027 debt maturity.
International Expansion and AI Initiatives
AIG said it continues to pursue growth opportunities in international markets and specialty businesses. The company recently closed its acquisition of Everest Colombia and announced an agreement to acquire Everest Chile, which is expected to close in the first half of 2027, subject to regulatory approvals.
Andersen highlighted growth opportunities in data-center-related insurance, construction, marine, accident and health, high net worth, Japan and selected international property markets. He also said the company is selectively reducing exposure in areas where pricing does not adequately reflect risk, including parts of the United Kingdom and Asia-Pacific casualty markets.
The insurer is also expanding its use of artificial intelligence through underwriting and claims tools branded as AIG Assist. Andersen said the tools have enabled underwriters to review more submissions and generate quotes faster, while helping claims adjusters respond more quickly to clients.
“Our aspiration is for AIG to be a top-performing company,” Andersen said, citing profitable growth, operating efficiency and capital allocation as the company’s primary levers for expanding earnings, book value and return on equity over time.
About American International Group (NYSE:AIG)
American International Group, Inc (NYSE:AIG) is a global insurance organization that provides property and casualty insurance products and related services to businesses, institutions, and individuals. Its offerings include commercial insurance, personal insurance, specialty coverage, accident and health products, and travel-related protection.
AIG serves customers through operations in the United States and international markets. Its commercial insurance business supports companies across industries with coverage such as property, casualty, liability, marine, and other specialty risks, while its personal insurance operations provide protection for individuals and families.
The company was founded in Shanghai in 1919 by Cornelius Vander Starr and is headquartered in New York City.
