AIG(AIG) - 2025 Q2 - Quarterly Report

Part I – Financial Information Financial Statements This section presents AIG's unaudited Condensed Consolidated Financial Statements for Q2 2025, including balance sheets, income, comprehensive income, equity, and cash flow statements, with detailed notes on accounting policies and segment data Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Investments | $93,966 | $93,613 | | Total Assets | $165,971 | $161,322 | | Total Liabilities | $124,442 | $118,772 | | Total AIG Shareholders' Equity | $41,501 | $42,521 | | Total Liabilities and Equity | $165,971 | $161,322 | Condensed Consolidated Statements of Income Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $7,091 | $6,560 | $13,874 | $13,323 | | Income from Continuing Operations | $1,144 | $475 | $1,842 | $1,272 | | Net Income (Loss) Attributable to AIG | $1,144 | $(3,977) | $1,842 | $(2,761) | | Diluted EPS from Continuing Operations | $1.98 | $0.71 | $3.13 | $1.85 | | Diluted Net EPS Attributable to AIG | $1.98 | $(5.96) | $3.13 | $(4.11) | Condensed Consolidated Statements of Cash Flows Highlights (in millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $1,335 | $1,449 | | Net Cash Provided by (Used in) Investing Activities | $3,315 | $(1,296) | | Net Cash Used in Financing Activities | $(4,212) | $(148) | | Net Increase (Decrease) in Cash | $469 | $(61) | Note 1. Basis of Presentation The unaudited financial statements are prepared under U.S. GAAP, requiring significant judgment for estimates like loss reserves, reinsurance assets, and fair value measurements - Critical accounting estimates requiring significant judgment include loss reserves, reinsurance assets, allowance for credit losses on investments, fair value measurements, and income taxes[23][25] - In May 2025, AIG issued $1.25 billion in notes and in June 2025, redeemed and repurchased $693 million of debt through cash tender offers[24] Note 3. Segment Information AIG realigned its structure into North America Commercial, International Commercial, and Global Personal segments, with performance evaluated by underwriting income - AIG realigned its organizational structure in Q4 2024 into three new reportable segments: North America Commercial, International Commercial, and Global Personal. Prior year presentations have been recast to conform[28][29] Underwriting Income by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | North America Commercial | $301 | $191 | $430 | $427 | | International Commercial | $300 | $230 | $540 | $560 | | Global Personal | $25 | $9 | $(101) | $39 | | Total General Insurance | $626 | $430 | $869 | $1,026 | Net Premiums Written by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | North America Commercial | $2,863 | $2,750 | $4,037 | $3,783 | | International Commercial | $2,325 | $2,284 | $4,352 | $4,223 | | Global Personal | $1,692 | $1,899 | $3,017 | $3,439 | | Total General Insurance | $6,880 | $6,933 | $11,406 | $11,445 | Note 4. Discontinued Operations Presentation AIG deconsolidated Corebridge on June 9, 2024, resulting in a $4.8 billion loss in Q2 2024, with its retained interest now an equity method investment - AIG deconsolidated Corebridge on June 9, 2024, resulting in a $4.8 billion loss in Q2 2024, primarily due to the recognition of a $7.2 billion accumulated comprehensive loss. The historical results of Corebridge are now presented as discontinued operations[47][48] - Post-deconsolidation, AIG's ownership in Corebridge was 21.0% as of June 30, 2025. AIG launched a secondary offering on August 6, 2025, to sell an additional 30 million shares for approximately $1.0 billion in gross proceeds[50][51] Note 5. Fair Value Measurements This note details recurring fair value measurements of assets and liabilities, categorized by a three-level hierarchy, with $80.2 billion in total assets measured at fair value as of June 30, 2025 Assets Measured at Fair Value on a Recurring Basis (in millions) | Level | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Level 1 | $8,352 | $12,638 | | Level 2 | $68,725 | $63,919 | | Level 3 | $3,497 | $3,532 | | Total (after netting) | $80,168 | $79,515 | - The company holds investments in private equity and hedge funds measured at fair value using Net Asset Value (NAV), totaling $3.5 billion as of June 30, 2025, with unfunded commitments of $1.1 billion[59][88] - AIG's retained investment in Corebridge is accounted for under the fair value option, with a value of $4.0 billion at June 30, 2025. Changes in its stock price are recognized in Net Investment Income[59][91] Note 6. Investments This note details AIG's investment portfolio, with $68.9 billion in available-for-sale bonds as of June 30, 2025, and discusses unrealized losses and net investment income Securities Available for Sale (Fair Value, in millions) | Security Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Corporate debt | $36,485 | $31,826 | | RMBS | $9,717 | $8,604 | | Non-U.S. governments | $6,913 | $8,107 | | CLO/ABS | $6,070 | $5,133 | | CMBS | $3,743 | $3,926 | | Other | $5,932 | $6,410 | | Total | $68,860 | $64,006 | Net Investment Income (in millions) | Period | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Net Investment Income | $1,466 | $990 | $2,571 | $1,969 | - As of June 30, 2025, AIG held 8,797 individual fixed maturity securities in an unrealized loss position totaling $2.3 billion, for which no allowance for credit loss was recorded as the losses were deemed due to non-credit factors[95][97] Note 7. Lending Activities This note details AIG's $3.5 billion net mortgage and other loan receivables as of June 30, 2025, primarily commercial mortgages, and provides credit quality indicators Mortgage and Other Loans Receivable, Net (in millions) | Loan Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commercial mortgages | $3,029 | $3,305 | | Commercial loans, other loans | $592 | $721 | | Life insurance policy loans | $5 | $6 | | Total Loans Receivable | $3,626 | $4,032 | | Allowance for credit losses | $(106) | $(164) | | Net Loans Receivable | $3,520 | $3,868 | - As of June 30, 2025, commercial mortgage loans on nonaccrual status amounted to $152 million, a decrease from $252 million at year-end 2024[126] - The weighted average loan-to-value ratio for the commercial mortgage portfolio was 69% at June 30, 2025, up from 65% at December 31, 2024[132] Note 8. Reinsurance This note details AIG's reinsurance activities, including the Fortitude Re funds withheld arrangement, with $3.3 billion in ceded reserves and 83% of $41.9 billion total recoverables rated investment grade - AIG's reinsurance transactions with Fortitude Re for run-off operations are structured as modified coinsurance and funds withheld arrangements. As of June 30, 2025, $3.3 billion of reserves were ceded to Fortitude Re[146][147] Financial Impact of Fortitude Re Funds Withheld Arrangements (in millions) | Item | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Investment Income | $39 | $33 | $79 | $72 | | Net Realized Gains (Losses) | $(66) | $7 | $(109) | $(21) | | Pre-tax Income (Loss) | $(27) | $40 | $(30) | $51 | - As of June 30, 2025, total reinsurance recoverables were $41.9 billion, of which approximately 83% were from reinsurers rated as investment grade[156] Note 12. Insurance Liabilities This note details AIG's insurance liabilities, with $69.8 billion in gross loss reserves as of June 30, 2025, and discusses prior year development and the NICO reinsurance agreement Loss Reserves Rollforward Highlights (Net, in millions) | Item | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Beginning Net Liability | $41,097 | $39,891 | $40,142 | $40,104 | | Total Losses Incurred | $3,493 | $3,467 | $7,287 | $6,906 | | Total Losses Paid | $(3,592) | $(3,452) | $(6,982) | $(6,595) | | Ending Net Liability | $41,888 | $39,934 | $41,888 | $39,934 | - For Q2 2025, AIG recognized $25 million of unfavorable prior year loss reserve development, primarily from adverse development in U.S. Excess Casualty, partially offset by favorable experience in U.S. Workers' Compensation and other lines[190] - The adverse development reinsurance agreement with NICO covers 80% of reserve risk on U.S. commercial long-tail exposures for accident years 2015 and prior, above a $25 billion threshold[189] Note 14. Equity This note details changes in shareholders' equity, including a $7.5 billion share repurchase program, $4.0 billion in repurchases, and a $0.45 per share quarterly dividend - Effective April 1, 2025, the Board authorized a $7.5 billion share repurchase program. During the first six months of 2025, AIG repurchased 50.4 million shares for an aggregate price of approximately $4.0 billion[212][215] - On August 6, 2025, the Board of Directors declared a quarterly cash dividend of $0.45 per share, an increase from the prior quarter's $0.40 per share[218][405] Accumulated Other Comprehensive Income (Loss) Rollforward (in millions) | Period | Beginning Balance (net of tax) | Total Other Comprehensive Income (Loss) | Ending Balance (net of tax) | | :--- | :--- | :--- | :--- | | Q2 2025 | $(6,464) | $916 | $(5,548) | | YTD 2025 | $(7,099) | $1,552 | $(5,548) | Note 15. Earnings Per Common Share (EPS) This note details the calculation of basic and diluted Earnings Per Common Share (EPS), with Q2 2025 diluted EPS from continuing operations at $1.98 Diluted Earnings Per Share (EPS) Calculation | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Income from Continuing Operations | $1.98 | $0.71 | $3.13 | $1.85 | | Loss from Discontinued Operations | $— | $(6.67) | $— | $(5.96) | | Net Income (Loss) Attributable to AIG | $1.98 | $(5.96) | $3.13 | $(4.11) | Note 16. Income Taxes The effective tax rate on continuing operations was 25.9% for Q2 2025, higher than the 21% statutory rate due to foreign operations and non-deductible expenses - The effective tax rate on income from continuing operations was 25.9% for Q2 2025 and 26.4% for the six months ended June 30, 2025, differing from the 21% statutory rate mainly due to foreign operations, state taxes, and non-deductible expenses[233][234] - AIG is currently under IRS examination for tax years 2011 through 2019 and is in the IRS Appeals process for issues from 2007 through 2010[242] - As of June 30, 2025, AIG maintained a valuation allowance of $300 million on U.S. federal tax attribute carryforwards that are not more likely than not to be realized[239] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) This section provides management's analysis of AIG's financial condition and results for Q2 and H1 2025, covering operating structure, economic factors, segment performance, investments, reserves, liquidity, and capital Executive Summary This summary outlines AIG's new three-segment operating structure, highlights the Corebridge deconsolidation, and notes key economic factors influencing the business - AIG's operating structure now comprises three segments: North America Commercial, International Commercial, and Global Personal. The General Insurance business consists of these three segments plus related net investment income[269] - AIG deconsolidated Corebridge on June 9, 2024. Consequently, Corebridge's historical financial results are presented as discontinued operations in this report[270] Consolidated Results of Operations Q2 2025 net income attributable to AIG common shareholders was $1.1 billion, a significant improvement from Q2 2024, driven by the absence of Corebridge deconsolidation loss and improved underwriting - The $5.1 billion increase in Q2 2025 net income compared to Q2 2024 was primarily driven by a $4.4 billion swing in discontinued operations related to the Corebridge deconsolidation, a $476 million increase in Net Investment Income, and a $348 million decrease in General Operating Expenses[284][286] Key Financial Metrics per Share | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Book value per share | $74.14 | $70.16 | | Adjusted book value per share | $76.62 | $73.79 | | Core operating book value per share | $63.71 | $61.75 | Return on Equity | Metric | Q2 2025 (Annualized) | Q2 2024 (Annualized) | | :--- | :--- | :--- | | Return on equity | 11.0% | NM | | Adjusted return on equity | 9.7% | 6.1% | | Core operating return on equity | 11.7% | 8.8% | Business Segment Operations This section details AIG's business segment performance, with General Insurance Q2 2025 underwriting income at $626 million and a combined ratio of 89.3%, reflecting improvements across commercial and personal lines General Insurance Underwriting Results (in millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Premiums Written | $6,880 | $6,933 | $11,406 | $11,445 | | Underwriting Income | $626 | $430 | $869 | $1,026 | | Combined Ratio | 89.3% | 92.5% | 92.6% | 91.1% | | Accident Year Combined Ratio, ex-CAT | 88.4% | 87.6% | 88.2% | 87.9% | - North America Commercial net premiums written grew 4% in Q2 2025, driven by new business and strong retention in Casualty[323] - International Commercial underwriting income increased by $70 million in Q2 2025, primarily due to lower catastrophe losses of $108 million[329] - Global Personal net premiums written decreased 11% in Q2 2025, mainly due to the sale of the global individual personal travel insurance business in December 2024[332] Investments AIG's investment strategy focuses on income generation and capital preservation, with the majority of assets in fixed maturity securities, and new investment yields exceeding maturing asset rates in H1 2025 - The primary investment objectives are generating investment income, preserving capital, managing liquidity, and growing surplus. The majority of assets backing insurance liabilities consist of fixed maturity securities[340] - For the six months ended June 30, 2025, blended investment yields on new investments were higher than rates on investments that were sold, matured, or called[344] Fixed Maturity Securities by Composite AIG Credit Rating (Fair Value, in millions) | Rating | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | AAA/AA/A | $49,203 | $45,756 | | BBB | $14,644 | $13,542 | | Total Investment Grade | $63,847 | $59,298 | | Below Investment Grade | $5,657 | $5,393 | | Non-rated | $78 | $60 | | Total | $69,582 | $64,751 | Insurance Reserves This section details AIG's insurance liabilities, with $41.9 billion in net loss reserves as of June 30, 2025, and discusses $128 million of net favorable prior year development in Q2 2025 Net Loss Reserves by Segment (in millions) | Segment | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | North America Commercial | $23,470 | $23,354 | | International Commercial | $13,018 | $11,265 | | Global Personal | $3,316 | $3,088 | | Other | $2,084 | $2,435 | | Total General Insurance & Other | $41,888 | $40,142 | - In Q2 2025, AIG recognized net favorable prior year development of $128 million, primarily from U.S. Workers' Compensation and U.S. Property and Special Risks, offset by adverse development in U.S. Excess Casualty[385][386][387] Liquidity and Capital Resources AIG maintains strong liquidity and capital, with $7.8 billion in AIG Parent liquidity sources as of June 30, 2025, and recent credit rating upgrades - As of June 30, 2025, AIG Parent held approximately $7.8 billion in liquidity sources, including cash, short-term investments, and a $3.0 billion revolving credit facility[413] - During the first six months of 2025, AIG repurchased approximately 50 million shares of common stock for $4.0 billion and paid $488 million in common stock dividends[405][406] - In May 2025, S&P upgraded AIG Parent's senior debt rating to A- from BBB+. In June 2025, Moody's upgraded the senior debt rating to Baa1 from Baa2[438][439] Quantitative and Qualitative Disclosures About Market Risk This section confirms no material changes in AIG's market risk exposures as of June 30, 2025, compared to the 2024 Annual Report disclosures - There have been no material changes in AIG's market risk exposures as of June 30, 2025, compared to the disclosures in the 2024 Annual Report[450] Controls and Procedures Management concluded AIG's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - AIG's CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[478] - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[479] Part II – Other Information Legal Proceedings This section incorporates legal proceedings information by reference from Note 13 of the Condensed Consolidated Financial Statements - Information regarding legal proceedings is detailed in Note 13 of the financial statements[481] Risk Factors This section directs readers to the comprehensive risk factors detailed in Part I, Item 1A of the company's 2024 Annual Report - Investors are advised to review the risk factors detailed in the 2024 Annual Report on Form 10-K[482] Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, AIG repurchased 21.4 million shares for $1.8 billion, with $5.7 billion remaining under the $7.5 billion repurchase program Share Repurchases for Q2 2025 | Period | Total Shares Repurchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 5,324,955 | $81.89 | | May 2025 | 6,573,007 | $83.04 | | June 2025 | 9,467,591 | $85.08 | | Total Q2 | 21,365,553 | $83.66 | - Effective April 1, 2025, the Board authorized a new $7.5 billion share repurchase plan. As of June 30, 2025, $5.7 billion remained available for future repurchases[483][484]