American International Group NYSE: AIG reported second-quarter results that management said reflected higher underwriting income, growth in selected commercial and personal insurance businesses, and continued expense discipline, while competitive pricing pressure persisted in North American property insurance.
Adjusted after-tax income per diluted share was $2.00, up 10% from a year earlier, while adjusted after-tax income totaled $1.1 billion, President and CEO Eric Andersen said. Core operating return on equity was 11.1% for the quarter and 11.6% for the first half of 2026.
Underwriting income rose 10% year over year to $686 million. The adjusted accident-year combined ratio improved 30 basis points to 88.1%, while the calendar-year combined ratio also improved 30 basis points to 89.0%.
Premium Growth and Business Performance
Net premiums written increased 9% on a constant-dollar basis, or 11% excluding North American property. Andersen said growth reflected organic expansion in selected global commercial businesses, momentum in Global Personal Insurance, and contributions from recent strategic transactions.
- Global Commercial Insurance net premiums written rose 9% year over year.
- North America Commercial premiums increased 9%, supported by retail casualty and financial lines growth, partly offset by declines at Lexington property.
- International Commercial premiums increased 10%, led by property and marine growth and partially offset by financial lines.
- Global Personal Insurance premiums increased 8%, driven by Accident & Health and high-net-worth businesses.
Global Commercial retention was 88%, while new business, including strategic transactions, reached $1.9 billion, an increase of 37% from the prior-year period.
Chief Financial Officer Keith Walsh said first-half net premiums written grew 13%, which the company expects to support earnings growth as premiums earn through during 2026 and 2027.
Global Personal Insurance generated underwriting income of $114 million, nearly $90 million higher than a year earlier. Its adjusted accident-year combined ratio improved 490 basis points to 91.2%, aided by underwriting actions, lower reinsurance costs, and more favorable high-net-worth commission terms.
Property Competition and Casualty Pricing
Andersen characterized the insurance market as moving from a prolonged period of broad price increases to a more selective environment shaped by individual line-of-business conditions. He said additional market capacity from excess-and-surplus carriers, managing general agencies, delegated authority structures, insurance-linked securities and sidecars has pressured pricing in certain lines, particularly property.
AIG continued to contract portions of its Lexington property portfolio where pricing did not meet its underwriting standards. The company reported a nine-percentage-point decline in Lexington property premium retention during the quarter. According to Andersen, the property environment and AIG’s deliberate underwriting actions reduced overall North America growth by more than three percentage points.
North America retail property has a different portfolio composition from Lexington, and the company said it sees selected growth opportunities, including through its Everest renewal rights transaction. International property rates were declining more moderately than in North America, according to Andersen, who said the portfolio remains attractive because of lower peak catastrophe exposure.
Casualty pricing remained more favorable. North America retail casualty pricing increased 10% and remained above loss-cost trends, while excess casualty pricing rose 14%. Excluding property, North America Commercial renewal pricing increased 5%.
International Commercial renewal pricing declined 6% after several years of compounded rate increases. Global Energy pricing fell 15%, while Financial Lines pricing declined 4%. Management said it would remain disciplined where market conditions do not support adequate risk-adjusted returns.
Andersen also said AIG had not seen evidence that social inflation was moderating and was not incorporating such an assumption into pricing. Walsh said the company strengthened U.S. excess casualty reserves by $74 million, primarily involving accident years 2016 and 2023. He said the adjustment to 2023 brought that year to a level of prudence similar to 2024 and 2025, and management was not seeing material deterioration or changes in frequency or severity.
Investment Income, Catastrophes and Capital
Second-quarter General Insurance adjusted pretax income was $1.5 billion, up 4% year over year. Net premiums earned increased 5% to $6.2 billion. Higher underwriting income and interest income were partly offset by lower income from alternative investments.
Total catastrophe charges were $210 million, including $75 million in net losses related to the Middle East conflict. The company recorded $145 million of favorable prior-year development, driven primarily by favorable loss experience in U.S. workers’ compensation and U.S. property and special risks.
Total net investment income on an adjusted pretax income basis was $908 million, including $871 million for General Insurance, which was flat year over year. Core fixed-income investment income rose 4%, and the annualized yield on the core fixed-income portfolio reached 4.72%, up 30 basis points from the prior-year quarter. Alternative investment income declined to $13 million from $48 million, reflecting an $8 million private-equity loss reported on a one-quarter lag.
AIG returned $904 million of capital to shareholders during the quarter, including $641 million in share repurchases and $263 million in dividends. The company ended the quarter with $9 billion of debt and a total debt-to-adjusted-capital ratio of 17.6%.
In May, AIG sold approximately 25 million Corebridge Financial common shares for $710 million, completing its exit from the former life and retirement business. Book value per share was $77.39 at June 30, up 4% from a year earlier, while adjusted tangible book value per share was $72.18, up 3%.
Strategic Priorities and Outlook
Andersen said AIG remains on track to meet commitments established at its 2025 Investor Day. The company’s priorities include underwriting discipline, efficient use of reinsurance and the balance sheet, artificial intelligence deployment, expense management, and investment in talent.
AIG said it remains on track to reduce the General Insurance expense ratio below 30% for full-year 2027. The trailing 12-month expense ratio stood at 30.7% at June 30, compared with 31.1% at the end of 2025.
The company is expanding its underwriting and claims AI tools, which Andersen said are enabling underwriters to review more submissions and generate quotes faster. He also said the data can provide insights into broker-level performance and distribution trends. Management emphasized that its AI deployment is intended to improve colleague efficiency and client outcomes rather than reduce headcount.
Andersen said AIG’s approach to capital management prioritizes profitable growth, but the company will continue to use dividends and repurchases if capital cannot be deployed at attractive returns. He added that AIG sees share repurchases as an attractive use of capital given its share price at a modest premium to tangible book value.
About American International Group (NYSE:AIG)
American International Group, Inc (AIG) is a global insurance holding company that provides a broad range of property-casualty insurance, specialty insurance, and risk management solutions to institutional, commercial and individual customers. Through its operating subsidiaries, AIG underwrites commercial and personal lines products—ranging from general liability, property, and casualty coverages to specialty lines such as professional liability, surety, cyber and marine—along with related services designed to help clients manage and transfer risk.
The company also has a long history in life insurance, retirement solutions and asset management through businesses that have been restructured or separated over time.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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