American International Group (AIG 2.03%), released its results for Q2 2025 on August 6, 2025. The headline news: the company reported earnings per share (non-GAAP) of $1.81, surpassing analyst expectations of $1.60 (non-GAAP) and growing 56% year-over-year on an adjusted after-tax income (non-GAAP) basis compared to the prior-year quarter. Revenue (GAAP) edged above projections, at $6.9 billion versus the anticipated $6.78 billion. Net income (GAAP) swung to $1.1 billion from a loss a year earlier. The quarter showed strong operational progress, significant improvements in underwriting, and notable capital returns to shareholders.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Adjusted, Non-GAAP) | $1.81 | $1.60 | $1.16 | 56.0 % |
| EPS (GAAP) | $1.98 | ($5.96) | NM | |
| Revenue (GAAP) | $6.9 billion | $6.78 billion | $6.9 billion | 0.0 % |
| Net Income (GAAP) | $1.1 billion | ($4.0 billion) | NM | |
| General Insurance Underwriting Income | $626 million | $430 million | 45.6% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Recent Focus
American International Group operates as a leading global insurer, serving clients worldwide with property and casualty insurance. Its core business is built on managing and underwriting risk for both individuals and commercial customers.
Recently, the company has concentrated on underwriting excellence, financial strength, and focused restructuring. It aims to improve profitability by enhancing its evaluation of risk, refining pricing, and streamlining operations. Key success factors include disciplined risk selection, robust capital management, and continued investment in operational efficiency.
Quarter Highlights: Performance and Key Metrics
The most significant development in Q2 2025 was the marked improvement in underwriting across the insurance business. The General Insurance combined ratio, which measures claims and expenses as a percentage of premiums, improved to 89.3%, down from 92.5% a year ago (GAAP). A ratio below 100 % signals underwriting profitability. Underwriting income climbed to $626 million, a 46% increase. Catastrophe-related losses were also less severe, totaling $170 million versus $330 million in Q2 2024, supporting strong margins.
Segment results reveal diverging trends. Global Commercial net premiums written increased 3% year-over-year on a comparable basis. North America Commercial net premiums written increased 4% on a reported basis, supported by growth in areas like Retail Casualty and Glatfelter (a program insurance business). International Commercial net premiums written advanced 2% year-over-year on a reported basis, especially in Casualty and Global Specialty lines. On the other hand, Global Personal Insurance net premiums were down 11%, although when adjusting for business divestitures and reinsurance changes, the decline was a less severe 3% on a comparable basis. Personal Auto and Personal Property grew, but these gains did not fully offset changes elsewhere.
Net investment income (GAAP) rose 48% from the prior year, reaching $1.5 billion. Part of this increase was due to the rising value of the company’s remaining stake in Corebridge Financial. While this lifts current results, fair value gains from investment holdings can be volatile from quarter to quarter and do not come directly from the insurance operations. Adjusted after-tax income (AATI, non-GAAP) reached $1.0 billion, up 35%.
Financial strength remains a central theme. Return on equity reached 11.0% and Book value per share (GAAP) rose to $74.14. Debt to total capital stood at 17.9%, while parent liquidity was $4.8 billion. Ratings upgrades from S&P (to AA-) and Moody’s (to A1) affirmed the quality of the company’s balance sheet. The company distributed $2.0 billion to shareholders through $1.8 billion of share repurchases and $254 million in dividends, reducing shares outstanding by approximately 13.8% from Q2 2024. The quarterly dividend was raised 12.5% to $0.45 per share.
Strategic Actions and One-Time Items
During Q2 2025, the company further reduced its stake in Corebridge Financial, bringing ownership to 21.0%. This move generated proceeds of approximately $430 million and continued the trend toward focusing on core property and casualty operations. Ongoing expense management efforts under the “AIG Next” initiative resulted in more than $500 million of savings, ahead of schedule, and improved operational efficiency.
Expense allocations shifted somewhat between corporate and operating segments, especially in International Commercial, due to ongoing implementation of a lean parent structure. This change affected reported expense ratios, making some comparisons less direct. However, underlying cost controls remained solid, with the General Insurance expense ratio falling to 31.0% from 31.5% in Q2 2024. In the Personal Insurance segment, results benefited from lower reinsurance costs and higher earned premiums.
Catastrophe loss charges dropped to 2.9 percentage points of the loss ratio, a significant reduction from 5.7 points in the prior-year quarter. Investment gains also played an important role in quarterly results, though future periods may not see similarly strong investment income if market volatility reverses.
“Combined ratio” and “accident year combined ratio” are important industry terms. The combined ratio represents the sum of claims and expenses as a proportion of premiums—below 100 % indicates profitability on core insurance activities. The accident year combined ratio adjusts the measure to focus only on losses occurring in the current period, excluding prior-year developments or catastrophe events. Tracking these metrics helps management and investors compare underlying performance over time.
Looking Ahead: Guidance and Investor Focus
Management did not issue specific forward guidance for upcoming quarters. However, it reiterated its confidence in multi-year goals around expense control and achieving over 10% core operating return on equity for the full year 2025. The company will continue targeting further improvements in its expense ratio and ongoing dividend growth.
In the periods ahead, investors should monitor the sustainability of underwriting gains, the performance of personal lines, and the impact of any volatility in investment income—especially from non-core holdings. Shifts in expenses between segments may make short-term comparisons less straightforward, and management has noted that investment income may moderate in future periods as equity stakes are further reduced or markets fluctuate. The quarterly dividend was raised 12.5% to $0.45 per share starting in Q2 2025.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
