American International Group, Inc. (AIG) Earnings

Management highlights

### Overall Financial Performance - Adjusted after-tax income per diluted share was $2, a 10% year-over-year increase; adjusted after-tax income totaled $1.1 billion - Core operating ROE was 11.1% for Q2 2026 and 11.6% for H1 2026 - Underwriting income was $686 million, a 10% year-over-year increase; adjusted accident year combined ratio improved 30 basis points to 88.1%, and calendar year combined ratio also improved 30 basis points to 89% - Returned $904 million in capital to shareholders in Q2 2026: $641 million in share repurchases and $263 million in dividends - Completed the sale of remaining Corbridge Common Stock holdings for $710 million, concluding the 5-year separation process and completing AIG's transformation into a focused global property and casualty insurer ### Market Environment Assessment - The market is transitioning from a broad positive pricing phase to a more selective environment, where profitability depends increasingly on line-specific dynamics - Increased market capacity from new entrants and alternative structures has created competitive pricing pressure in property lines, but also created opportunities for full-service, diversified carriers like AIG - Executing deliberate contraction of the Lexington North American property portfolio in underpriced areas, leading to a 9 percentage point reduction in premium retention, reducing overall North America growth by over 3 percentage points - Casualty remains favorable: North America retail casualty pricing is up double digits, exceeding loss cost trends, with mid-teen increases for excess casualty; international casualty has lower litigation exposure and offers selective profitable growth opportunities - Global specialty: Energy and aviation pricing does not reflect heightened Middle East risk and recent industry losses, while political violence/terrorism pricing increased 9% in Q2 2026 (following an 8% decrease in Q1) amid elevated conflict risk, with growing client demand for these products ### Five Strategic Priorities - **Exceptional underwriting performance and targeted capital deployment**: Prioritize growth of attractive portfolio segments, deliver end-to-end multi-line solutions for complex clients (such as AI hyperscaler data center projects), pursue disciplined geographic expansion (announced acquisition of Everest Insurance Operations in Colombia to access the fast-growing Latin American market), and support clients navigating evolving risks like the ongoing Middle East conflict - **Balanced balance sheet and reinsurance management**: Maintain a disciplined framework for underwriting profit via risk selection, prudent limits, and strategic reinsurance; achieved favorable outcomes at June 1 reinsurance renewals, follow a balanced capital philosophy: prioritize profitable growth, return excess capital to shareholders via repurchases and dividends, and view current share repurchases as an attractive use of capital at current valuations - **Scale AI capabilities for improved performance**: Continue rolling out Underwriting by AIG Assist and Claims by AIG Assist, which boost underwriter productivity by increasing submission volume and reducing quote turnaround time; generate new broker-level performance insights from AI-processed submission data to improve distribution partnership strategy and data-driven decision making across market cycles - **Expense discipline with targeted growth investment**: Prioritize resource allocation to client-facing and growth areas, while simplifying processes to generate efficiencies; remains on track to reduce the general insurance expense ratio below 30% for full year 2027 - **Invest in team and talent development**: Prioritize internal promotion while adding targeted external talent to strengthen cross-organizational connectivity, pursue emerging growth verticals, and build an agile, connected go-to-market culture aligned with strategic growth initiatives

Guidance

- AIG remains on track to achieve all financial commitments outlined at the 2025 Investor Day - Management maintains the target to reduce the full year 2027 general insurance expense ratio below 30% - Management reaffirms the existing 15-20% debt-to-adjusted capital leverage target, and is comfortable with the current 17.6% leverage ratio - Full year 2026 net premium growth guidance of low-to-mid teens is maintained, with management noting that 13% growth through H1 2026 puts the company on track, while emphasizing that growth will not be pursued blindly at the cost of underwriting discipline, and the final outcome will respond to actual market conditions

Segment performance

1. North America Commercial: Adjusted accident year combined ratio was 86.7%; calendar year combined ratio was 84.0%, a 190 basis point improvement year-over-year. Net premiums written increased 9% year-over-year, with growth in retail casualty and financial lines offset by disciplined declines in Lexington property. This segment contributed 410 basis points of catastrophe losses and 680 basis points of favorable prior year development in Q2 2026. 2. International Commercial: Adjusted accident year combined ratio was 87.3%, a 230 basis point increase year-over-year; calendar year combined ratio was 91.3%, which included 390 basis points of catastrophe losses (75 million of which came from Middle East conflict-related net losses). Net premiums written increased 10% year-over-year, driven by growth in property and marine, partially offset by targeted underwriting reductions in financial lines. The accident year loss ratio rose 100 basis points to 55.2% due to rate pressure, partially mitigated by underwriting actions and reinsurance benefits, while the expense ratio increased 130 basis points to 32.1% driven by higher acquisition costs from strong new business growth and mix changes. 3. Global Personal: Q2 2026 underwriting income hit $114 million, an increase of nearly $90 million year-over-year, with adjusted accident year underwriting income more than doubling. Adjusted accident year combined ratio was 91.2%, a 490 basis point decrease year-over-year, while calendar year combined ratio was 92.9%, a 560 basis point improvement year-over-year. For H1 2026, the combined ratio improved 1200 basis points to 91.2%. Net premiums written increased 8% year-over-year, driven by growth in accident and health (from a robust new client pipeline) and organic expansion of the high net worth business. The accident year loss ratio improved 270 basis points to 51.5% from underwriting actions and lower reinsurance costs, and the expense ratio improved 220 basis points from favorable high net worth commission terms. The segment included 170 basis points of catastrophe losses with de minimis prior year development. Overall, total general insurance net premiums written grew 9% year-over-year in Q2 2026 and 13% year-over-year for H1 2026.

Risks & headwinds

- Excess capacity inflows across the market have created competitive pricing pressure in property lines, particularly in North American excess and surplus lines property, where rate pressure is forcing deliberate portfolio contraction to maintain underwriting profitability - Pricing for energy and aviation lines does not currently reflect heightened exposure from the ongoing Middle East conflict and recent large industry-wide losses, requiring disciplined underwriting to avoid uncompensated risk - Social inflation and rising litigation costs in the U.S. have not yet shown sustained moderation, so management continues to embed current elevated cost trends into pricing and reserving - Prior year reserve strengthening was completed for 2016 and 2023 U.S. excess casualty to align 2023 reserving prudence with the 2024 and 2025 accident years, though no material deterioration in loss trends was identified beyond required alignment - Alternative investment income was lower in Q2 2026 due to a private equity loss reflecting first quarter 2026 market volatility, though private equity results are reported on a one-quarter lag

Analyst Q&A

• Q: AIG's combined ratio and expense metrics are now comparable to peers, but ROE remains lower due to lower premium leverage. How does management approach excess capital in a soft market that limits growth opportunities? /

  A: Management notes AIG has a rock-solid, well-capitalized balance sheet with strong liquidity and debt capacity. The priority is to grow into the existing capital base through organic opportunities and selective strategic tuck-in acquisitions that add premium volume and complementary capabilities. Excess capital is returned to shareholders via consistent share repurchases and dividends, which management views as attractive at current valuations. Strong execution across underwriting, expenses, investment income, and capital management will allow AIG to hit the high end of its previously guided ROE range. (317 characters)

• Q: Have you observed any moderation of U.S. social inflation, and are you updating your pricing assumptions to reflect a slowdown? After strengthening 2023 excess casualty reserves, do you need to review reserves for older accident years 2021 and 2022? /

  A: While there are early positive legislative changes in a small number of states, there is no evidence of sustained moderation in social inflation to date, so no changes have been made to pricing assumptions. The 2023 reserve adjustment was only a prudence alignment to match the reserving conservatism already applied to 2024 and 2025, not a response to unexpected deterioration. No material adverse trends have been observed in older accident years, and reserves for all years remain within the expected range of outcomes. (398 characters)

• Q: The acquisition expense ratio has ticked up due to the ongoing mix shift away from property toward casualty. How will this impact core loss ratios going forward, and what is the outlook for overall margins? /

  A: The mix shift away from underpriced property to casualty has naturally pushed up the overall acquisition ratio and loss ratio modestly, which management has expected for multiple quarters. This pressure on commercial lines margins has been fully offset by strong profitability improvements in the global personal segment and continued progress on overall expense discipline. Adjusted accident-year combined margins have held steady overall through the mix shift, and management remains comfortable with current overall margin levels. (340 characters)

• Q: Global personal lines has already hit investor day combined ratio targets. How much of this improvement is from favorable market conditions versus permanent operational changes? /

  A: The improvement comes from a combination of factors: fundamental operational changes including active portfolio repositioning, underwriting discipline, reinsurance savings, lower acquisition costs, and improved operating efficiency, plus a recent stretch of lower than expected catastrophe losses. The high net worth business has seen sustainable improvements to profitability and premium growth, while the accident and health segment is delivering solid growing volume from a strong new client pipeline, making the overall business's improved performance fundamentally sound. (356 characters)