AIG's Q2 2025: Unraveling Contradictions in Property Pricing, Reserves, and AI Underwriting

Property pricing strategy and reinsurance market impact, reserve reapportionment and inflation uncertainty, AI impact on underwriting, high net worth personal lines business projections, and reinsurance and property pricing strategy are the key contradictions discussed in American International Group's latest 2025Q2 earnings call.



Strong Financial Performance:
- AIG reported an adjusted after-tax income per diluted share of $1.81, an increase of 56% year-over-year, with adjusted after-tax income for the quarter at $1 billion, an increase of 35% from the prior year quarter.
- This growth was driven by underwriting income from General Insurance and net investment income on an adjusted pretax basis of $955 million, up 9% year-over-year.

Property Insurance Market Dynamics:
- AIG's U.S. property business posted underwriting income of $626 million, an increase of 46% year-over-year.
- This improvement was due to effective underwriting and strategic reinsurance purchases, maintaining profitability despite a challenging rate environment in the large account property segment.

Operational Efficiency Improvements:
- Through AIG Next, the company achieved over $530 million of annual run rate expense savings, with over $500 million realized by the end of the second quarter.
- These savings were driven by restructuring, simplification, and cost alignment efforts, enhancing operational effectiveness.

Capital Management and Shareholder Returns:
- AIG returned $2 billion of capital to shareholders in Q2, bringing the year-to-date total to $4.5 billion.
- Share repurchases were driven by strong financial performance and the company's strategic goal to return excess capital to shareholders.