AIG Reports Strong Income Growth Amidst Changing Insurance Rates

American International Group (AIG) reported an increase in adjusted income during the fourth quarter, despite facing declining property insurance rates and rising liability rates. AIG is advancing its AI-driven initiatives, boosting productivity significantly, and aiming for improved regulatory compliance.

AI-Driven Innovation and Rate Fluctuations

AIG's AI tool implementation is revolutionizing underwriting and claims processes. In North America, retail property pricing decreased by 10% in 2025, while excess and surplus (E&S) lines fell by 13%, as CEO Peter Zaffino noted. Zaffino, slated to become executive chairman, highlighted AI's impact ahead of Eric Andersen's transition to CEO.

Conversely, wholesale and excess casualty pricing rose by mid-teens percentages in 2025. Financial lines saw a slight 2% reduction. Retail excess casualty prices increased by 15%, while wholesale prices rose by 12%, CFO Keith Walsh reported, indicating shifts in the industry's risk management dynamics.

Financial Performance and Market Trends

AIG's net income for the fourth quarter reached $735 million, a 22.2% decline year-over-year, due to unrealized losses from its Corebridge Financial stake. However, adjusted after-tax income rose to $1.07 billion, a 31.2% increase, showcasing strength in compliance and regulatory strategies.

The general insurance sector witnessed $8.07 billion in gross premiums, with a slight decrease in net premiums. The combined ratio improved to 88.8% due to fewer catastrophe-related claims, highlighting effective carrier strategies in risk management.

Outlook and Future Deployments

AIG’s net income for 2025 was $3.1 billion, a 15.6% rise from 2024, with adjusted net income at $4.04 billion. Gross premiums in general insurance held steady at $35.83 billion, with a combined ratio improvement to 90.1%. The AIG Assist AI tool will be fully integrated into underwriting by 2026, enhancing compliance and efficiency as seen with Lexington’s 26% increase in submissions.

AIG's expense ratio decreased to 31.1% by 2025, with plans to reduce it below 30% by 2027 according to Zaffino, reflecting a strong focus on cost management and regulatory adherence within the insurance industry landscape.