American International Group Inc. opened its 2025 financial year with results that outpaced market expectations, posting an earnings per share (EPS) of $1.17.
This was $0.18 above the analyst consensus of $0.99, driven by lower-than-anticipated catastrophe-related costs and steady underwriting results.
The group’s net premiums written (NPW) totaled $4.5 billion for the quarter ending March 31, flat on a reported basis but up 8% when adjusted for currency movements and the 2024 sale of AIG’s travel business.
AIG uses a “comparable basis” to provide more consistent year-on-year comparisons. Growth was most notable in the global commercial segment, which saw NPW reach $3.2 billion, with North America commercial up 14% and international commercial up 8% on a comparable basis.
Catastrophe losses reached $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, as adjusted, excluding catastrophe events, stood at 87.8%—its lowest for a first quarter since the global financial crisis.
Net income attributable to AIG common shareholders declined to $698 million, or $1.16 per diluted share, 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 tied to increased catastrophe charges, partially offset by more favorable prior-year reserve development and reduced expenses.
As part of its broader capital deployment and income strategy, AIG announced last month plans to increase its exposure to private assets to grow 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%. In addition, the allocation to private equity is expected to increase from 5% to a target range of 6% to 8%.
Investment income totaled $1.1 billion, up 13% 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 was stable at $845 million.
AIG returned $2.5 billion to shareholders during the quarter, which included $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, the third consecutive year with double-digit increases. Book value per share reached $71.38, and parent company liquidity ended the quarter at $4.9 billion.
According to chief executive officer Peter Zaffino, the company remains on course to deliver 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,” said Zaffino.
The firm also reported that its projected full-year EPS compound annual growth rate remains above 20%, significantly higher than most sector estimates.
AIG also revised several key performance targets under a new three-year strategic plan. The company aims 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%.
Will AIG’s current performance trajectory continue through 2025? Share your thoughts in the comments.
