AIG Reports 10% Rise in Q2 Adjusted EPS Amid Strategic Property Portfolio Pullback
The insurer delivered $2 per share in adjusted earnings while deliberately contracting its Lexington property book in response to competitive pricing pressure.
Strong Quarter Amid Market Transition
American International Group reported adjusted after-tax income of $2 per diluted share for the second quarter of 2026, a 10% increase year-over-year, as the company navigated what CEO Eric Andersen characterized as a market "transitioning from an extended phase of broad positive pricing into a more selective environment" (earnings call, 2026-08-07).
Adjusted after-tax income reached $1.1 billion for the quarter, while underwriting income rose 10% to $686 million. The accident year combined ratio, as adjusted, improved 30 basis points to 88.1%, and core operating return on equity stood at 11.1% for the quarter and 11.6% for the first half of 2026 (earnings call, 2026-08-07).
Deliberate Property Pullback
The insurer executed a strategic contraction of its Lexington property portfolio in response to pricing pressure driven by excess capacity. "Given the ongoing rate pressure, we have intentionally continued to contract our Lexington property portfolio in targeted areas, while selectively growing the parts of the property portfolio we believe will deliver the best risk-adjusted returns," Andersen said (earnings call, 2026-08-07).
The disciplined underwriting approach resulted in a 9 percentage point reduction in premium retention at Lexington Property during the quarter. These actions reduced overall North America growth by more than 3 percentage points (earnings call, 2026-08-07).
Despite the property headwinds, net premiums written increased 9% overall, or 11% excluding North American Property. Global Commercial Insurance net premiums written grew 9%, with North America commercial up 9% and international commercial up 10% (earnings call, 2026-08-07).
Casualty Strength and Emerging Opportunities
AIG maintained pricing power in casualty lines, with North America retail casualty achieving double-digit rate increases above loss cost trends. In North America excess casualty, the company secured mid-teen pricing increases while maintaining discipline on attachment points and terms (earnings call, 2026-08-07).
Global Personal Insurance net premiums written increased 8%, driven by momentum in Accident & Health and continued organic growth in the high net worth business. Global Commercial retention stood at 88%, while new business, including strategic transactions, totaled $1.9 billion, up 37% year-over-year (earnings call, 2026-08-07).
Strategic Priorities and Capital Deployment
Andersen outlined five strategic priorities centered on underwriting excellence, efficient balance sheet use, expanded AI capabilities, expense discipline, and talent investment. He highlighted emerging opportunities in areas like data center insurance for AI infrastructure, where AIG can deploy its multiline capabilities.
The company announced an agreement to acquire Everest Insurance operations in Colombia during the quarter, aimed at accessing "one of the largest and fastest developing insurance markets in Latin America" (earnings call, 2026-08-07).
AIG returned $904 million to shareholders in the second quarter, comprising $641 million in share repurchases and $263 million in dividends (earnings call, 2026-08-07).
According to MarginX data, AIG is expected to report third quarter 2026 results on November 4, 2026, with FOMC rate decisions scheduled for September 16 and October 28, 2026.
This article was generated by MarginX from the earnings call on 2026-08-07. It is not investment advice.