AIG (AIG) Stock Hinges On Underwriting Strength As Profit Cools

AIG stock slipped about 1.5% today to roughly US$78. Yet the latest quarter showed another solid underwriting performance that keeps the long term story very much alive. Adjusted after tax income came in at US$1.1b and core operating return on equity was about 11% for the quarter, supported by a General Insurance combined ratio below 90%.

While the immediate price reaction looks muted, the more important developments are in underwriting discipline, capital returns and the multiyear push to improve returns. The rest of this earnings breakdown will focus on whether that progress looks durable.

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Q2 2026 Earnings Summary

• Total Revenue (Q2 2026 vs. Q2 2025): US$7,094m vs. US$7,055m (steady, slightly higher year on year)
• Net Income (Excl. Extra Items) (Q2 2026 vs. Q2 2025): US$948m vs. US$1,144m (down year on year)
• Basic EPS (Q2 2026 vs. Q2 2025): US$1.79 vs. US$2.00 (down year on year)
• Combined Ratio, General Insurance (Q2 2026 vs. Q2 2025): 89.0% vs. 89.9% (improved. A lower combined ratio signals stronger underwriting profitability)

Prefer clear visuals instead of another wall of text and earnings figures? See American International Group’s full financial picture, including its recent underwriting and profitability trends, in the interactive company report for American International Group.

AIG’s underwriting and ROE story under the microscope

Bulls argue AIG has shifted from a messy turnaround to a cleaner insurer that can compound through disciplined underwriting, cost work and tech driven efficiency. Q2 adds weight to that view. Core operating ROE sits around 11% for the quarter and 11.6% for the first half, consistent with the Investor Day path that hinges on underwriting and expense control. General Insurance underwriting income rose and the calendar year combined ratio improved to 89%, which lines up with the claim of steadier earnings quality. Net premiums written grew 9% in Q2 and 13% in the first half without management chasing volume in softer areas, which supports the narrative around risk selection rather than growth at any price. The General Insurance expense ratio on a trailing 12 month view is 30.7% and management still aims to move below 30% by 2027, so the cost story is progressing but not yet finished.

Bear concerns on margins, risk and balance sheet

Bears focus on whether AIG’s margin gains can hold once favorable conditions fade, and whether leverage and reserve risks cap the story. Q2 does not fully resolve those concerns. Net income excluding extra items declined to US$948m from US$1,144m and basic EPS fell to US$1.79 from US$2.00. This challenges the idea of a clean, one way earnings trajectory. Parts of the book show pressure. North America Commercial and International Commercial both reported higher accident year combined ratios, with Middle East conflict losses and mix effects pushing International higher. Management also strengthened U.S. excess casualty reserves, a reminder that social inflation and long tail risks remain live issues. Debt stands at US$9b with total debt to adjusted capital of 17.6%. This is not extreme, yet it is still a constraint if underwriting or investment income soften.

With leverage still at 17.6% of adjusted capital and earnings under pressure, it is worth stress testing whether American International Group’s balance sheet can comfortably support future shocks. Check the full solvency breakdown in the financial health analysis of American International Group stock.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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