AIG Financial Services Outlook: Earnings Growth and Market Strategies
American International Group, Inc. (AIG), with a market capitalization of $41.9 billion, offers a diverse range of insurance and financial services. This includes property-casualty and life insurance, alongside retirement solutions, serving customers in over 200 global locations. AIG's operations are divided into North America Commercial, International Commercial, and Global Personal units.
AIG's stock performance has seen a 1.3% increase over the past six months, defying the broader industry's decline of 7.3%. Analysts project an average price target for AIG of $87.86, indicating a potential 12.7% increase from the recent closing price of $77.97.
Forecasts by Zacks paint a positive picture for AIG, with the consensus estimate for 2026 earnings per share at $7.80, marking a 10% year-over-year increase. In the past week, analysts updated their estimates upwards twice, with no downward revisions. Revenue projections for 2026 are set at $28.8 billion, reflecting a 5% rise year-over-year. AIG has exceeded earnings expectations over the last four quarters, achieving an average surprise of 15.2% and earning a Value Score of A.
AIG is streamlining its strategy by divesting non-core businesses to focus on its General Insurance sector. This approach aims to stabilize the portfolio, enhance liquidity, and optimize capital utilization. Plans are underway to sell particular legacy private assets shortly.
The company reported an improved expense ratio of 31.1% in 2025, down from 32% in 2024, driven by a refined business focus, robust cost management, and a strengthened premium base, resulting in enhanced cost efficiency by 90 basis points. The General Insurance segment also delivered strong underwriting results, with a 22% increase in underwriting income to $2.3 billion in 2025, attributed to reduced catastrophe-related losses and improved prior-year developments. The combined ratio improved by 170 basis points to 90.1.
Operationally, AIG's net cash from activities rose from approximately $3.27 billion in 2024 to $3.31 billion in 2025. Additionally, the company returned $6.8 billion to shareholders through dividends and share buybacks, maintaining a quarterly dividend of 45 cents per share.
Despite these strengths, AIG's valuations reflect a forward 12-month P/E ratio of 9.76x, which is higher than the industry average of 8.4x, prompting investor caution. The company's current Zacks Rank is #3 (Hold). Debt remains a challenge for AIG, possibly affecting growth plans, with cash holdings at $1.3 billion and long-term debt rising to $9 billion, compared to $8.8 billion previously. The net debt-to-EBITDA ratio of 1.1% exceeds the industry norm of 0.6%, and return on equity (ROE) at 9.8% trails the industry standard of 15.5%.
Among other promising stocks in the financial sector are The Allstate Corporation, BankUnited, and Cboe Global Markets, each boasting a Zacks Rank #1 (Strong Buy), with consensus estimates highlighting potential earnings growth and consistent positive earnings surprises.