American International Shows Strong Underwriting Growth: Buy or Hold?

American International Group, Inc. AIG, with a market capitalization of $41.9 billion, provides property-casualty insurance, life insurance, retirement solutions, and other financial services to customers in more than 200 countries and jurisdictions. The company operates through three main segments — North America Commercial, International Commercial, and Global Personal.

In the last six month AIG’s shares have gained 1.3%, outperforming the broader industry’s 7.3% decline over the same period. Based on short-term price targets from 22 analysts, the average target price for AIG is $87.86, implying a potential upside of about 12.7% from the latest closing price of $77.97.

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Zacks Estimates for AIG

The Zacks Consensus Estimate for American International’s 2026 earnings is pegged at $7.80 per share, indicating a 10% year-over-year rise. In the past seven days, it has witnessed two upward estimate revisions against none in the opposite direction. The consensus mark for revenues is pegged at $28.8 billion for 2026, indicating a 5% year-over-year increase. AIG beat on earnings in each of the past four quarters, with an average surprise of 15.2%. AIG carries a Value Score of A.

American International Group, Inc. Price, Consensus and EPS Surprise

American International Group, Inc. price-consensus-eps-surprise-chart | American International Group, Inc. Quote

Growth Drivers

American International has been streamlining its operations by divesting non-core businesses to focus more on its General Insurance segment. This strategic shift aims to reduce portfolio volatility, enhance cash liquidity and accelerate capital deployment. As part of this initiative, the company plans to divest certain non-core legacy private assets in the near future.

AIG’s expense ratio has been improving, supported by changes in business mix, continued expense discipline and a stronger premium base. The company’s expense ratio declined to 31.1% in 2025 from 32% in 2024, representing an improvement of 90 basis points. This reduction reflects better cost efficiency and stronger expense management.

The General Insurance segment also delivered solid underwriting performance. Underwriting income reached $2.3 billion in 2025, representing a 22% increase from the prior-year level. The improvement was driven by lower catastrophe-related losses, more favorable prior-year development (PYD) and reduced acquisition expenses. The combined ratio improved 170 basis points to 90.1, indicating significantly stronger underwriting performance compared with the year-ago period.

AIG’s cash flow position is strengthening. Net cash provided by operating activities increased to approximately $3.31 billion in 2025 from $3.27 billion in 2024, reflecting improved operational performance. The company also returned $6.8 billion to shareholders in 2025 through share repurchases and dividends. AIG’s quarterly dividend recently reaching 45 cents per share, highlighting its commitment to returning value to shareholders.

Valuation of AIG

AIG currently trades at a forward 12-month P/E ratio of 9.76x, which is higher than the industry average of 8.4x. Given this premium valuation, investors may prefer to remain cautious. The stock currently holds a Zacks Rank #3 (Hold), suggesting that a wait-and-watch approach may be appropriate.

AIG: Key Risks

There are a few factors that investors should keep an eye on.

AIG stock carries a high debt burden, which can hamper its growth initiatives. It ended the fourth quarter with a cash balance of $1.3 billion and a long-term debt of $9 billion (up from $8.8 billion at the end of 2024). Its net debt-to-EBITDA ratio is 1.1%, much higher than the industry average of 0.6%, showing that the company relies heavily on debt. Its ROE of 9.8% is lower than the industry average of 15.5%. We believe that a clear and strategic plan can help support long-term growth.

Key Picks

Some better-ranked stocks in the broader finance space are The Allstate Corporation ALL, BankUnited, Inc. BKU and Cboe Global Markets, Inc. CBOE, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Allstate’s 2026 earnings is pegged at $25.4 per share, which has witnessed seven upward revisions in the past 30 days, with no movement in the opposite direction. ALL beat earnings estimates in each of the trailing four quarters, with the average surprise being 54.3%. The consensus estimate for 2026 revenues is pinned at $72.2 billion, implying 6.4% year-over-year growth.

The Zacks Consensus Estimate for BankUnited’s 2026 earnings is pegged at $4.01 per share, which has witnessed one upward revision in the past 30 days against no movement in the opposite direction. BKU beat earnings estimates in each of the trailing four quarters, with the average surprise being 11.1%. The consensus estimate for 2026 revenues is pinned at $1.2 billion, calling for 8% year-over-year growth.

The Zacks Consensus Estimate for Cboe Global Markets’ 2026 earnings is pegged at $11.36 per share, which has witnessed five upward revisions in the past 30 days0 against no movement in the opposite direction. CBOE beat earnings estimates in each of the trailing four quarters, with the average surprise being 4.4%. The consensus estimate for 2026 revenues is pinned at $2.6 billion, calling for 5% year-over-year growth.

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