American International Group (AIG) shares climbed 5.3% to close at $78.77 on Friday, after the insurer reported a sharp jump in quarterly earnings and disclosed a pullback in private credit exposure—a move that resonated with investors increasingly wary of opaque lending markets.
For the first quarter, adjusted after-tax income attributable to common shareholders surged to $1.15 billion, or $2.11 per diluted share, from $702 million, or $1.17 a share, in the same period last year. Net income attributable to common shareholders also rose to $763 million, or $1.41 a share, compared with $698 million a year earlier, according to a company filing.
The results were driven by a strong underwriting performance. General Insurance underwriting income more than tripled to $774 million, while the combined ratio—a measure of claims and expenses as a percentage of premiums—improved sharply to 87.3% from 95.8%, keeping the company firmly in profitable territory. Catastrophe-related charges plunged 66% to $180 million, according to Reuters.
Net premiums written increased 24% to $5.6 billion, or 18% on a constant-dollar basis, which AIG attributed to strategic partnerships, adjustments in reinsurance arrangements, and focused organic growth.
On the investment side, CFO Keith Walsh told analysts that AIG has “slowed our deployment” in private credit, with direct lending exposure standing at roughly $1.2 billion, or under 1.5% of the General Insurance investment book. The move comes as insurers and asset managers face tougher questions from investors about private credit—debt that bypasses public bond markets—amid rising concerns over defaults, liquidity, and valuations.
The board raised the quarterly dividend by 11% to 50 cents a share, marking the fourth consecutive year of double-digit increases. AIG returned $760 million to shareholders during the quarter: $519 million through share buybacks and $241 million via dividends. The company’s stake in Corebridge Financial fell to 5.6%.
AIG also announced a leadership transition. Peter Zaffino will remain chairman and CEO for now, but Eric Andersen, who joined the company in February, is set to become CEO on June 1. Zaffino told analysts during the earnings call that the transition is proceeding smoothly.
Looking ahead, the company faces several headwinds. U.S. wildfire season typically intensifies during the summer, and some areas of AIG’s property book are experiencing pricing pressure. Walsh noted that alternative investment returns for the second quarter are likely to fall short due to ongoing public-market volatility. Zaffino also said that while the Middle East conflict has not yet materially affected AIG, the company remains vigilant.
On the technology front, Zaffino highlighted AIG Assist, the company’s in-house platform, which now operates across eight business lines. In Lexington middle-market property, the platform has driven a 30% increase in quotes, a 55% reduction in time to quote, and about a 40% rise in binding rates. However, Zaffino emphasized that “human oversight” remains essential.
For now, investors viewed the quarter as evidence that AIG can continue to grow earnings even as it reins in exposures that tend to unsettle markets. The key question is whether that discipline can endure through the summer catastrophe season and the ongoing CEO transition.
