AIG reported second-quarter results that exceeded analyst expectations as stronger underwriting performance helped absorb an increase in catastrophe-related claims. The company said net premiums written in its general insurance segment rose 9% to $7.5 billion in the three months ended June 30, and underwriting income climbed 10% to $686 million.
Adjusted, after-tax profit in the quarter increased 10% to $2.00 per share, comfortably ahead of Wall Street projections of $1.92 per share, according to estimates compiled by LSEG. Management attributed the outperformance primarily to disciplined underwriting and higher pricing in recent periods.
Catastrophe-related charges for the quarter totaled $210 million, up from $170 million in the year-ago period. Included in the most recent quarter’s catastrophe tally was $75 million of charges tied to the Middle East conflict. Catastrophe losses are typically among the most volatile components of insurers’ earnings, with claims able to spike after a single major event while quieter stretches tend to boost underwriting profits.
The company reported an adjusted general insurance accident year combined ratio of 88.1% for the quarter, a 30-basis-point improvement compared with the prior year. A combined ratio below 100 indicates that underwriting results were profitable on a pure insurance basis, before investment income and other items.
In a statement, newly appointed CEO Eric Andersen said: "Strong quarterly results demonstrate our ability to perform well in the current market, which has transitioned from an extended phase of broad positive pricing into a more selective environment." The comment framed AIG’s results within a market the company describes as moving away from broadly favorable pricing toward greater selectivity.
AIG also returned $904 million of capital to shareholders in the quarter. The company is one of the largest commercial insurers globally, and its results followed a similar trend at peers: property and casualty insurer Travelers also beat expectations for second-quarter profit last month, citing lower catastrophe losses and solid investment income.
Contextual summary: AIG’s quarter combined top-line premium growth, a stronger underwriting margin and a measured level of catastrophe-related charges. Key underwriting metrics improved year-over-year, while catastrophe volatility remained a material factor for results.
Market reaction and positioning: The results reflect continued emphasis on pricing discipline and underwriting selection, with management noting a shift in the broader pricing environment toward selectivity. Capital return to shareholders was maintained at a notable level during the quarter.