How AIG Is Protecting Underwriting Quality as Property Pricing Softens
American International Group, Inc.’s AIG property business is facing a more competitive pricing environment as additional capacity pressures rates, particularly in North America. Rather than chasing premium growth, AIG is reducing exposure where pricing no longer supports adequate risk-adjusted returns.
AIG’s Lexington property business reflects this discipline. Premium retention declined 9 percentage points in the second quarter as AIG reduced targeted exposures and walked away from business that failed to meet its underwriting standards. These actions, along with softer pricing, reduced growth in North America by more than 3 percentage points. The insurer continues to pursue selective opportunities in North America Retail Property, while International Property remains relatively more favorable as rate declines are more moderate.
AIG is still generating growth elsewhere. General Insurance net premiums written increased 9% year over year, or 11% excluding North America Property, highlighting stronger momentum across better-priced businesses. Underwriting performance also remains solid. General Insurance underwriting income rose 10% to $686 million, while the adjusted accident-year combined ratio improved 30 basis points to 88.1%. However, North America Commercial’s adjusted accident-year combined ratio increased 50 basis points, reflecting business-mix changes and rate pressure, particularly in property.
Casualty provides another area of pricing support, with North America Retail Casualty pricing rising 10%, including a 14% increase in Excess Casualty. Pricing in these businesses remains above loss-cost trends, giving room to pursue growth where returns are attractive. AIG’s shift toward better-priced businesses should help protect underwriting profitability as market conditions evolve.
How Are Competitors Faring?
Peers such as The Travelers Companies, Inc. TRV and Chubb Limited CB are also emphasizing underwriting discipline as property pricing becomes more competitive.
TRV is prioritizing underwriting discipline as property pricing softens. National Property net premiums written declined 2% in the second quarter as Travelers reduced business where pricing and terms were less attractive.
Similarly, CB is accepting slower property growth to maintain underwriting discipline amid soft conditions in large-account and E&S property. Chubb’s P&C premiums rose 3%, or 6.3% excluding these property lines, while the combined ratio was 83.8%.
AIG’s Price Performance, Valuation & Estimates
Shares of American International have lost 3.5% over the past year against the industry’s 4.1% growth over the same period.
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From a valuation standpoint, AIG trades at a trailing 12-month price-to-tangible book ratio of 1.08X, below the industry average of 1.25X. AIG carries a Value Score of A.
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The Zacks Consensus Estimate for AIG’s 2026 earnings is pegged at $8.02 per share, indicating 13.1% year-over-year growth, followed by an estimated 8.7% increase in 2027.
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AIG currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
