AIG · Q3 2025 Earnings

Q: Questions on capital deployment strategy, including whole-co liquidity levels, minimum liquidity targets, and whether the 30% expense ratio target is a floor or ceiling given Everest transaction benefits and AI productivity gains.

Management has ~$5.3B liquidity at quarter-end and will maintain several billion dollars as prudent minimum. Sold ~32M Corbridge shares for $1B in proceeds. Targeting ~$1B annual share repurchase run rate for 2026. On expense ratio, not providing new guidance but Everest conversion, Convex quota share, and organic growth should help improve toward 30% target. AI benefits expected but timeline uncertain; company focused on reaching 30% and will reassess target after achievement.

Q: Earnings power of Convex quota share in context of property catastrophe pricing declines and portfolio volatility, plus confirmation on whether renewal rights deal is active pending regulatory approval.

Convex has diversified portfolio (insurance and reinsurance, not just property cat) with exceptional underwriting. Property cat exposure is limited compared to peers like Aspen, and Convex actively manages volatility through ILWs and cap bonds. Management comfortable with exposure within risk appetite and doesn't expect AALs to increase. Renewal rights deal is active outside EU; EU regulatory approval expected soon but conversations already underway with brokers and clients.

Q: Competitive pricing dynamics in commercial insurance, whether loss ratio degradation should be embedded in models given soft pricing environment, and impact of AIG Assist/Gen AI on revenue trajectory and organic growth.

Soft pricing environment is real but company manages through mix analysis (E&S vs. retail, casualty vs. property), cycle management, and differentiation. Property and specialty seeing headwinds but profitable if underwritten well and volatility protected; flight to quality evident in new business growth. Gen AI focuses on data digestion and speed of execution for underwriters to access more data points faster, enabling better decisions and scaling. AIG Assist processed ~200K submissions YTD in middle market. Technology deployment will drive organic growth through faster servicing and preparation for market turns, not through expanded appetite.

Bullish

American International Group

Reported November 4, 2025

30-second summary

30-second take: AIG printed a clean underwriting quarter — General Insurance combined ratio of 86.8% (-580bps YoY), accident-year combined ratio as adjusted of 88.3% (flat YoY), and underwriting income of $793M (+81% YoY) — with Q3 annualized core operating ROE of 13.6% (10.9% YTD, inside the 10-13% Investor Day range). The bigger story is a narrative pivot: management is redirecting capital from pure shareholder returns into minority stakes (Convex, Onex) and renewal-rights deals (Everest $2B portfolio), while pulling forward GenAI deployment across North America, UK, and EMEA commercial lines by six months. 2026 buyback run-rate guidance of ~$1B annual represents a normalization from the elevated 2025 pace of $5-6B, which itself was funded by Corebridge divestiture proceeds — management is framing the redirected capital as offering better ROI than further repurchases at this level.

Headline numbers

EPS

Q3 FY2025

$2.20

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
EPS	$2.20	—	$1.81	+21.5%

Guidance

No quantitative guidance issued for Q4 FY2025 or FY2025 full year; prior quarter's forward guidance targets have been superseded by actuals.

Segment performance

Q3 FY2025

Segment	Q3 FY2025	YoY
North America Commercial	$2.435B	—
International Commercial	$2.115B	+1.0%
Global Personal	$1.68B	-4.0%
General Insurance NPW	$6.23B	-1.0%

Capital & returns

Q3 FY2025

Segment	Q3 FY2025
Return on Equity (ROE)	5.0%
Core Operating Return on Equity	13.6%
Capital Returned to Shareholders	$1.5 billion

Other KPIs

Q3 FY2025

Segment	Q3 FY2025
General Insurance Combined Ratio	86.8%
General Insurance Accident Year Combined Ratio, as adjusted	88.3%
General Insurance Underwriting Income	$793 million
Net Investment Income (APTI basis)	$1.024 billion
Adjusted After-Tax Income (AATI)	$1.226 billion

Management tone

Q2 anchor: Property book defense → Q3 anchor: Platform capital deployment

GenAI accelerated from operating metric to operating model. Last quarter management disclosed early productivity wins from a single private financial-lines pilot. This quarter Zaffino moved the entire rollout forward by six months — North America, UK, and EMEA commercial lines now deploy by year-end — and dropped the most personal-conviction line of the call: "In my career, I've never seen anything progress at the pace and scale like I've witnessed in the last six months with GenAI and Compute." AIG Assist has now processed ~200K middle-market submissions YTD. The shift from pilot data to a personal career-frame statement signals management believes the productivity curve is steeper than they originally modeled.

Capital deployment narrative flipped from returns to platforms. A quarter ago the framing was "high end of $5-6B" buybacks and AIG Next savings closing out. This quarter the same management team announced minority stakes in Convex and Onex, a $2B Everest renewal-rights acquisition, and explicitly guided 2026 buyback run-rate down to ~$1B. The framing: "Convex, ONIX, and Everest are unique opportunities that came to AIG first because of our strong brand, strong performance, and the personal relationships that we've developed over time." The narrative has moved from defending the buyback pace to defending why these stakes generate better returns. This is a real strategic pivot — and it puts deal economics squarely on the watch list.

Investor Day targets shifted from aspirational to ahead of plan. Three months ago Zaffino positioned the 10-13% ROE and sub-30% expense ratio as targets requiring execution. This quarter: "we are ahead of what we outlined at the beginning of the year, which is an enormous achievement." YTD core operating ROE of 10.9% is inside the band; Q3 annualized at 13.6% is above it. The confidence level on forward 2026-2027 targets is materially higher than at Q2.

Property book moved from preemptive defense to passing reference. Last quarter Zaffino spent roughly ten minutes deconstructing property cat economics. This quarter property was a brief acknowledgment: "The property market rate environment remains challenging...the accident year and calendar year combined ratios remain exceptional for the property portfolio." The thesis didn't break — and management is no longer treating it as the main objection to answer.

Recurring themes management leaned on this quarter:

GenAI acceleration reshaping underwriting cycle time and submission processingStrategic capital deployment via minority platform stakes rather than passive returnsSub-90% combined ratio sustainability across 16+ consecutive quartersReturn on equity expansion: 13.6% Q3 annualized, 10.9% YTDPrivate credit reallocation as core portfolio optimization leverProfitable growth in casualty and specialty offsetting property rate pressure

Risks management surfaced:

Property market rate environment remains challengingInternational commercial adverse development on pre-2018 general liability reserves and auto trendsMarket conditions and macro dynamics remain dynamicConvex, ONIX, and Everest transactions subject to market conditions and regulatory closureGlobal interest rate projections affecting future net investment income growth expectations

Q&A highlights

Alex Scott · Barclays

Expected underwriting profitability from the Convex quota share and Everest renewal rights deals, with concern that combined ratios may be near 100% initially based on Everest's recent commentary.

Convex quota share is a high-quality profitable account starting at 7.5% growing to 12.5% by 2028. Everest renewal rights ($2B portfolio) broken into pieces: international performing well with combined ratios similar to AIG's; US property portfolio running very well with similar loss ratios; financial lines will achieve AIG's combined ratio at lower expense ratios post-conversion; casualty to improve meaningfully through reinsurance structure with low 30s seeding commission and better underwriting, with casualty representing <20% of overall casualty book.

Convex quota share: 7.5% initial, growing to 10% in 2027, 12.5% in 2028$2 billion Everest renewal rights portfolioLow 30s seeding commission on casualtyCasualty portfolio will be <20% of AIG's overall casualty

Brian Meredith · UBS

Questions on capital deployment strategy, including whole-co liquidity levels, minimum liquidity targets, and whether the 30% expense ratio target is a floor or ceiling given Everest transaction benefits and AI productivity gains.

Management has ~$5.3B liquidity at quarter-end and will maintain several billion dollars as prudent minimum. Sold ~32M Corbridge shares for $1B in proceeds. Targeting ~$1B annual share repurchase run rate for 2026. On expense ratio, not providing new guidance but Everest conversion, Convex quota share, and organic growth should help improve toward 30% target. AI benefits expected but timeline uncertain; company focused on reaching 30% and will reassess target after achievement.

$5.3 billion liquidity at Q3 quarter-end~32 million Corbridge shares sold for ~$1 billionSeveral billion dollars minimum liquidity to be maintained~$1 billion annual share repurchase run rate for 2026

Mayor Shields · KBW

Earnings power of Convex quota share in context of property catastrophe pricing declines and portfolio volatility, plus confirmation on whether renewal rights deal is active pending regulatory approval.

Convex has diversified portfolio (insurance and reinsurance, not just property cat) with exceptional underwriting. Property cat exposure is limited compared to peers like Aspen, and Convex actively manages volatility through ILWs and cap bonds. Management comfortable with exposure within risk appetite and doesn't expect AALs to increase. Renewal rights deal is active outside EU; EU regulatory approval expected soon but conversations already underway with brokers and clients.

Convex portfolio is diversified across specialty classes and casualty, not just property catProperty cat exposure not comparable to Aspen's concentrationAALs expected to remain flatEU regulatory approval sought and expected 'fairly soon'

Michael Zurimski · BMO Capital Markets

Competitive pricing dynamics in commercial insurance, whether loss ratio degradation should be embedded in models given soft pricing environment, and impact of AIG Assist/Gen AI on revenue trajectory and organic growth.

Soft pricing environment is real but company manages through mix analysis (E&S vs. retail, casualty vs. property), cycle management, and differentiation. Property and specialty seeing headwinds but profitable if underwritten well and volatility protected; flight to quality evident in new business growth. Gen AI focuses on data digestion and speed of execution for underwriters to access more data points faster, enabling better decisions and scaling. AIG Assist processed ~200K submissions YTD in middle market. Technology deployment will drive organic growth through faster servicing and preparation for market turns, not through expanded appetite.

~200,000 submissions processed YTD in middle market via AIG AssistGen AI focused on data ingestion speed and underwriter decision quality, not appetite expansionNew business and submission count up despite pricing headwindsProperty and specialty segments showing price headwinds but remain profitable

Answers to last quarter's watch list

GI accident-year combined ratio as adjusted holding below 90%. Resolved positively. Q3 AY CR as adjusted came in at 88.3%, flat YoY and the 16th consecutive sub-90% quarter, with the headline combined ratio improving 580bps YoY to 86.8%. Underwriting income of $793M was up 81% YoY. The property rate-down cohort earning through has not yet broken the thesis.

Resolved positively

Expense ratio Q3-Q4 trajectory. Resolved positively. GI expense ratio was 30.9% in Q3 (-100bps YoY); YTD GI expense ratio of 30.8% vs. 31.7% prior-year YTD demonstrates real operating leverage even after absorbing ~$400M of reapportioned parent costs since 2023. Management reaffirmed the path to sub-30% by 2027 and signaled multiple levers (Everest conversion, Convex, AI, organic growth) accelerating that path.

Resolved positively

Casualty premium momentum. Resolved positively on closer read. NA Commercial NPW was flat reported but +3% adjusted for the prior-year casualty closeout transaction, with excess casualty +13% rate and Lexington casualty +14% rate in North America. The headline optically looks soft but the underlying casualty trajectory remains intact.

Resolved positively

Buyback pace. Resolved negatively for shareholder-return bulls. AIG returned $1.5B in Q3 and $6B YTD, consistent with the elevated 2025 pace, but management explicitly guided 2026 run-rate to ~$1B annually — a normalization as Corebridge monetization proceeds taper. This is a forward redirection of capital into Convex, Onex, and Everest. Whether that's good or bad depends on deal accretion delivery.

Resolved negatively

GenAI scale-out beyond financial lines pilot. Resolved positively. Management pulled the deployment timeline forward by six months, with rollout now spanning the rest of Lexington by year-end 2025 plus North America, UK, and EMEA commercial lines. AIG Assist processed ~200K middle-market submissions YTD. Zaffino's "never seen anything progress at this pace" framing is the most assertive AI commentary of the cycle.

Resolved positively

What to watch into next quarter

NA Commercial reported NPW returning to growth. Q3 printed flat reported (+3% adjusted). Watch whether Q4 reported growth reaccelerates as the closeout-comparison drag fades and the Everest deal begins to close.

Convex and Everest regulatory closure timing. Management said EU approval expected "fairly soon" on Everest; Convex quota share starts at 7.5% in 2026. Any slippage of either close date pushes the 2026 EPS/ROE accretion story to the right and weakens the case for the $1B buyback step-down.

2026 buyback delivery vs. ~$1B guide. This is the new baseline. Underspend signals deal capital is consuming more than expected; overspend signals deals slipped and management is defaulting back to returns.

International Commercial reserve development. Management flagged adverse development on pre-2018 general liability and auto in Q3. Watch whether this becomes a recurring line in Q4 or is contained.

Expense ratio trajectory toward sub-30%. GI expense ratio printed at 30.9% in Q3 and 30.8% YTD. Watch whether Q4 prints another step-down or whether progress plateaus ahead of Everest/Convex conversion benefits arriving in 2026.

GenAI productivity metrics from expanded deployment. With North America, UK, and EMEA commercial lines coming online by year-end, the Q4 call should produce a fresh round of submit-to-bind, ingestion, and cycle-time data points across more than just the original financial-lines pilot.

Sources

AIG Q3 2025 Earnings Release, filed with SEC, 4 November 2025 — https://www.sec.gov/Archives/edgar/data/5272/000000527225000156/q32025earningsrelease.htm
AIG Q3 2025 earnings call (management prepared remarks and Q&A).
AIG Q2 2025 Tapebrief (prior-quarter context).

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