AIG’s Comeback: Strong Profits, AI Ambitions, and a New Era of Insurance Leadership
AIG posts strong Q2 results with a 50%+ rise in income and upgraded credit ratings. The insurer is integrating AI to boost underwriting and customer service efficiency.
American International Group (AIG) Enters a New Chapter
American International Group (AIG) is moving past its troubled history, including scandal and a government takeover, into a "new chapter." This phase is marked by stronger financial results, disciplined underwriting, and a focused push into generative artificial intelligence.
Strongest Performance in Years
AIG's second quarter showed notable improvement. Adjusted after-tax income per share rose over 50% year-over-year, driven by a 46% increase in underwriting income. The company’s core operating return on equity (ROE) reached nearly 12%, and the calendar-year combined ratio improved to 89.3%.
Despite challenging conditions, including a busy catastrophe season with wildfires, AIG delivered solid results. The company returned $4.5 billion in capital to shareholders, retired $130 million in debt, and earned ratings upgrades from both S&P and Moody’s — the latter for the first time since the 1990s.
These upgrades are significant milestones, reflecting the company’s progress over recent years and restoring confidence among key stakeholders.
AIG Focuses on the Future
The 2008 financial crisis and government bailout are clearly behind AIG. After the Treasury Department sold its last shares in 2012, the company has been fully independent. In 2017, AIG was removed from the "too-big-to-fail" list, allowing it to concentrate solely on growth and innovation.
A key focus now is artificial intelligence. AIG’s leadership sees AI as a tool to improve underwriting, claims processing, and customer interaction. Unlike many insurers still testing AI, AIG is actively integrating it into its core operations.
AI is currently deployed in the Financial Lines business and expanding to Lexington. Early results include greater efficiency in underwriting workflows, faster submission handling, and better risk prioritization. Importantly, AI supports underwriters rather than replacing them — providing better data and reducing cycle times to improve bind ratios.
Leadership emphasizes that those who invest in AI now will gain a significant advantage in the next few years, with scale and digital capabilities becoming key competitive factors.
Property Markets Still Challenging
While casualty and financial lines are stabilizing, property markets remain difficult. AIG is relying on reinsurance to manage volatility, preferring predictability over exposure to unpredictable events like hurricanes and wildfires.
This approach helps maintain a low combined ratio in a global business context. Meanwhile, AIG is exploring growth in casualty, specialty, and select international markets.
The company remains open to acquisitions, particularly in accident and health insurance. However, any acquisition must be strategic, enhance ROE, and align with AIG’s culture.
Balancing Training Pipeline and Experienced Hires
AIG is building its future workforce by blending new talent with experienced professionals, especially in data science and digital fields. The company maintains a strong underwriting culture while keeping attrition low.
Its training programs bring university graduates into analyst roles and develop talent internally. Experienced hires from financial services supplement this pipeline.
Technology is also improving efficiency in smaller-commercial segments. Platforms like Western World allow policies to be bound within minutes, marrying speed with risk intelligence to help clients manage resilience, not just pay claims.
Outlook
With improved credit ratings, a leaner balance sheet, and early AI successes, AIG is positioning itself as a disciplined underwriter and emerging digital leader. The company faces the ongoing challenge of maintaining profitability amid shifting market cycles while scaling AI across its operations.
Still, momentum is strong. Executing well on these fronts opens substantial opportunities ahead.
Year to date, AIG stock has increased over 12% and is up nearly 175% from its five-year low, trading around $82 per share.
