Insurance Daily News

AIG Beats Profit Estimates Despite Q3 Underwriting Challenges

American International Group (AIG) surpassed Wall Street earnings expectations for the third quarter, reporting adjusted after-tax income of $2.06 per diluted share. This figure outperformed the $1.89 consensus estimate from LSEG and the $1.88 estimate from MarketBeat. Despite the earnings beat, the insurer faced significant underwriting headwinds, with general insurance underwriting income falling 29% to $564 million compared to the prior-year period.

The primary driver for the decline in underwriting performance was severe weather, particularly convective storms in North America. Catastrophe-related charges reached $283 million, or 4.4 loss ratio points, a sharp increase from the $100 million recorded in the same quarter last year, which the company described as an unusually calm period. Additionally, favorable prior-year reserve development decreased to $91 million from $180 million. These factors contributed to a rise in the combined ratio to 91.3% from 86.8%, though a slight reduction in the expense ratio to 30.6% provided some offset.

Performance varied significantly across business segments. The North America Commercial division experienced the most pressure, with its combined ratio rising to 92.9% from 82.6% and underwriting income dropping 57% to $167 million. Net premiums written in this segment grew by 2% to $2.5 billion, with growth in retail casualty and financial lines partially offset by a reduction in property lines. Conversely, the International Commercial segment saw premiums rise 13% to $2.4 billion, while Global Personal premiums grew 6%, with underwriting income in that segment increasing 44% to $114 million.

While quarterly underwriting income faced pressure, AIG’s year-to-date performance remains robust. Over the first nine months of 2026, adjusted earnings per share rose 20.2% to $6.18, and underwriting income exceeded $2 billion. Chief Executive Eric Andersen, who assumed the role on June 1, 2026, stated that the company remains on track to meet financial targets established at its 2025 Investor Day.

Investment income also played a role in the quarter's financial narrative. Total net investment income rose to $1.1 billion, up from $772 million, though much of this increase was attributed to easier year-over-year comparisons regarding equity securities and the company's former stake in Corebridge. On an adjusted basis, investment income grew more modestly to $1.075 billion from $1.024 billion. AIG returned $787 million to shareholders during the quarter through a combination of share buybacks and dividends.

Why it matters

AIG's results highlight the ongoing industry-wide struggle to manage the impact of severe convective storms, which are increasingly driving volatility in underwriting performance even as carriers maintain strong investment income and premium growth.

FAQ

How did AIG's third-quarter earnings compare to analyst expectations?
AIG reported adjusted after-tax income of $2.06 per diluted share, which was higher than the $1.89 expected by LSEG and the $1.88 consensus from MarketBeat.

What was the primary cause of the decline in underwriting income?
The decline was largely driven by $283 million in catastrophe-related charges, primarily from severe convective storms in North America, and a reduction in favorable prior-year reserve development.

Who is currently leading AIG?
Eric Andersen serves as president and CEO, having assumed the role on June 1, 2026, while Peter Zaffino serves as executive chair of the board.

Source: Insurance Business America. See the original source for full details.