AMERICAN INTERNATIONAL GROUP, INC. Annual Report: A Year in Review for Investors

Considering an investment in AIG? This summary cuts through the financial jargon to give you a clear, concise overview of the company's performance and strategic direction over the past year. We'll highlight key financial results, strategic moves, and future plans, helping you understand if AIG aligns with your investment goals.

AMERICAN INTERNATIONAL GROUP, INC. (AIG), a prominent global insurer, reported a strong year, making significant progress in its strategic transformation. The company is streamlining its operations and sharpening its focus on its core property and casualty (P&C) insurance business, which includes home, auto, and commercial coverage. This strategic shift involved divesting non-core assets to simplify operations and enhance capital efficiency.

Financial Performance Highlights AIG delivered robust financial results for the fiscal year ending December 31, 202X. The company reported total revenues of approximately $52.5 billion, a 7% increase year-over-year. This growth stemmed from strong underwriting performance in its P&C segment and favorable investment income. Net income for AIG shareholders surged to $6.8 billion, up 15% from the previous year, resulting in diluted earnings per share (EPS) of $8.10. Improved underwriting margins in General Insurance and a solid return on its investment portfolio primarily drove this growth.

Major Wins and Challenges Major Wins: AIG continued to simplify its business and unlock shareholder value. A key achievement was reducing its stake in Corebridge Financial Inc. (its life and retirement business). During 2025, AIG conducted multiple secondary stock offerings, decreasing its ownership from 48% to 25% and generating approximately $7.5 billion in proceeds. AIG used these funds for share repurchases and debt reduction. The company also completed several other significant sales:

• Crop Risk Services business in Q3 2023 for $2.1 billion
• Validus Re (a reinsurance business) in Q4 2023 for $1.5 billion
• Global Personal Travel Insurance business in Q1 2024 for $500 million These sales significantly strengthened AIG's capital and sharpened its focus on P&C.

Challenges: Despite strong performance, AIG navigated several challenges. The P&C segment faced approximately $1.8 billion in increased catastrophe losses from severe weather events, particularly in North America. Inflationary pressures also impacted claims costs in certain lines, requiring careful underwriting adjustments. While volatility in global financial markets presented headwinds for investment returns, AIG's diversified portfolio helped mitigate the impact.

Financial Health and Capital Management AIG maintains a strong financial position, with a robust balance sheet and ample liquidity. As of year-end, the company held approximately $12.3 billion in cash and short-term investments. Total debt stood at $28.5 billion, resulting in a manageable debt-to-equity ratio of 0.45x. AIG's strong cash flow from operations, reaching $9.2 billion, supported significant capital returns to shareholders. The company repurchased $4.0 billion of its common stock and paid $1.2 billion in dividends during the year, demonstrating confidence and commitment to shareholder value.

Key Risks for Investors Investors should be aware of several key risks:

• Natural Catastrophes: AIG's profitability is affected by the frequency and severity of natural catastrophes (e.g., hurricanes, wildfires), which can lead to substantial claims.
• Market Fluctuations: Fluctuations in interest rates and equity markets can impact investment income and the valuation of its investment portfolio.
• Regulatory Changes: Regulatory changes, particularly in the global insurance landscape, could increase compliance costs or restrict operations.
• Competition: The highly competitive nature of the insurance industry, coupled with the rise of new technologies and business models, presents ongoing challenges.
• Cybersecurity: Cybersecurity threats remain a significant concern, as data breaches could impact operations and reputation.

Competitive Positioning AIG maintains a strong competitive position as a leading global P&C insurer, especially in commercial and specialty lines. Its extensive global network, deep underwriting expertise, and strong brand recognition enable it to serve complex client needs. The company's strategic focus on P&C, coupled with ongoing portfolio optimization, aims to enhance profitability and its competitive edge against top-tier rivals. AIG continues to invest in technology and data analytics to improve underwriting precision and operational efficiency.

Strategic Evolution and Leadership Under its current leadership, AIG is executing a significant strategic shift. The ongoing reduction of its Corebridge stake, along with the completed sales of Crop Risk Services, Validus Re, and Global Personal Travel Insurance, highlight a disciplined approach to portfolio management. In a significant subsequent event on February 6, 2026, AIG announced the completion of the sale of its remaining 19.9% stake in Convex Group Limited to Onex Corporation for approximately $1.1 billion. This further streamlined its portfolio and solidified its focus on core P&C. These actions demonstrate a clear commitment to simplifying AIG's structure and maximizing value from its P&C business.

Future Outlook Looking ahead, AIG is optimistic. The company plans to continue a disciplined underwriting approach in its P&C segment, targeting profitable growth in key markets. Management anticipates further operational efficiencies and expects to leverage its strong capital position for continued shareholder returns, including potential additional share repurchases. AIG aims to maintain its strong balance sheet and liquidity, positioning itself for sustainable long-term value.

Market Trends and Regulatory Landscape AIG operates within a dynamic environment influenced by several key trends. Rising interest rates, while a challenge for some sectors, generally benefit AIG's investment income. However, the increasing frequency and severity of climate-related events are driving higher catastrophe losses and influencing industry-wide underwriting strategies. The ongoing digitalization of insurance, from customer engagement to claims processing, presents opportunities for efficiency and challenges for technological investment. Regulatory bodies continue to focus on capital adequacy, consumer protection, and climate-related disclosures, which AIG actively monitors and addresses.