American International Group, Inc. ((AIG)) has held its Q1 earnings call. Read on for the main highlights of the call.
American International Group, Inc. (AIG) showcased a robust financial performance in its latest earnings call, reflecting a strong sentiment despite facing challenges such as catastrophe losses and tariff-related uncertainties. The company reported significant growth and strategic advancements, particularly in expense management and AI adoption, which support a positive outlook for the future.
Exceptional First Quarter Financial Performance
AIG reported an impressive adjusted after-tax income of $702 million, equating to $1.17 per diluted share. The company saw its net premiums written rise to $4.5 billion, marking an 8% year-over-year increase. This growth was primarily driven by a 10% increase in Global Commercial, underscoring AIG’s strong financial footing.
Strong Growth in North America Commercial Insurance
The North America Commercial Insurance segment experienced remarkable growth, with net premiums written increasing by 14% year-over-year. Lexington, a key player in this segment, reported a 23% growth, led by a 27% increase in Lexington Casualty, highlighting AIG’s robust performance in this market.
Significant Improvement in Expense Ratios
AIG achieved a notable reduction in its general insurance expense ratio, which decreased to 30.5% from 31.8% in the previous year. This improvement was partly due to the AIG Next initiatives, contributing to a 20 basis point enhancement, demonstrating effective cost management.
Continued Progress on Strategic Initiatives
AIG continues to make substantial progress on its strategic and financial objectives, effectively managing volatility. The company reported strong underwriting results and disciplined expense management, which are central to its strategic initiatives.
Advancements in AI Strategy
AIG emphasized its strategic focus on deploying GenAI end-to-end, partnering with Palantir and Anthropic. These advancements in AI are expected to drive future growth, positioning AIG at the forefront of technological innovation in the insurance industry.
Successful Capital Management
AIG demonstrated effective capital management by returning $2.5 billion to shareholders in the first quarter. This included $2.2 billion in share repurchases and a 12.5% increase in dividends, reflecting the company’s commitment to delivering value to its shareholders.
Strong Performance in International Commercial
The International Commercial Insurance segment also showed strong performance, with net premiums written growing 8% year-over-year on an FX-adjusted basis. Notably, Property grew by 35% and Marine by 17%, indicating robust international growth.
Impact of Catastrophe Losses
The first quarter was impacted by $520 million in catastrophe losses, primarily due to the California wildfires, which accounted for $460 million. This resulted in a combined ratio of 95.8%, highlighting the challenges faced by AIG in managing natural disaster-related losses.
Uncertainty from Tariffs and Inflation
AIG acknowledged the significant uncertainty posed by tariffs and inflation, which could affect future loss costs and transactional activity. These factors present ongoing challenges that the company must navigate.
Challenges in Financial and Property Lines
The company faced pressure in its Financial Lines, with a decrease in pricing and challenges in public D&O rates. Additionally, property pricing encountered headwinds, with decreases noted in Financial Lines, Retail Property, and Lexington Property.
Forward-Looking Guidance
AIG provided substantial guidance on its strategic direction and financial performance. The company aims to achieve a 10%-plus core operating ROE by 2025 and a 20%-plus EPS compound annual growth rate over the next three years. AIG’s strategic focus includes integrating GenAI for growth and expanding internationally, particularly in the Indian market through its joint venture with Tata Group.
In conclusion, AIG’s earnings call reflected a strong sentiment, with the company demonstrating resilience and strategic growth despite facing challenges. Key takeaways include robust financial performance, strategic advancements in AI, and effective capital management, positioning AIG for continued success in the future.