Why AIG Stock Belongs in Your Portfolio Today

Overview of American International Group, Inc. (AIG)

American International Group, Inc. (AIG) is a global insurance company that offers a wide range of services including property and casualty insurance, life insurance, retirement solutions, and other financial services. It serves customers in over 200 countries and jurisdictions. AIG provides products and services designed to help individuals and businesses protect their assets, manage risks, and ensure retirement security.

In the year-to-date period, AIG has seen a significant rise of 8.4%, outperforming the industry average of 7.1%. The company is headquartered in New York and holds a market capitalization of $43.4 billion. AIG operates through three main segments: North America Commercial, International Commercial, and Global Personal. Its forward P/E ratio of 10.73X is higher than the industry average of 9X, suggesting growing investor confidence in its future performance.

Zacks Rank and Earnings Outlook

Currently, AIG carries a Zacks Rank #2 (Buy), reflecting positive expectations for its future growth. According to the Zacks Consensus Estimate, AIG's 2025 earnings are projected to be $6.34 per share, representing a 28.1% year-over-year increase. In the past 30 days, there has been one upward estimate revision, with no downward revisions. Additionally, the consensus revenue estimate for 2025 stands at $27.6 billion. AIG has consistently beaten earnings estimates in the past four quarters, with an average surprise of 9.5%.

Growth Drivers for AIG

AIG’s revenue growth has been driven by increased net premium written (NPW), high retention rates, and new business generation. These factors have contributed to the strong performance of the General Insurance segment. Specifically, the North America Commercial segment saw a 6.7% year-over-year increase in NPW, while the International Commercial segment experienced a 3.1% rise in NPW during the first half of 2025.

Tata AIG, a high-growth business within AIG, has maintained a compounded annual growth rate of 20% from 2020 to 2025, outperforming the industry. AIG expects this growth rate to continue through 2030, with incremental gains anticipated from Western World, Lexington Middle Market, and other alternative businesses in 2025.

AIG plans to launch AIG underwriter assistance for Lexington Middle Market and Property & Casualty businesses in the third quarter of 2025. A wider rollout across North America Commercial, the U.K., and EMEA Commercial lines is expected in 2026. The company is also developing AIG claims assistance as it scales up its use of generative AI in underwriting.

Financial Performance and Shareholder Value

AIG has improved its expense ratio on a comparable basis due to changes in business mix, ongoing cost discipline, and a stronger premium base. These efforts are expected to enhance operational efficiency and boost operating margins. In the first half of 2025, total benefits, losses, and expenses declined by 2.4% year over year, primarily due to lower general operating and other expenses.

AIG’s strong cash generation capabilities have allowed it to return value to shareholders through share buybacks and dividend payouts. In the first half of 2025, the company returned $4 billion through share buybacks and $488 million in dividends. Additional share repurchases worth $467 million were made between July 1 and August 1, 2025. AIG’s leverage ratio has also improved, with a total debt to capital ratio of 18.2% at the end of the second quarter, well below the industry average of 34.2%.

Risks and Challenges

Despite its strong performance, AIG faces several challenges. The company has experienced a deteriorating combined ratio across its business lines, largely due to California wildfires. In the first half of 2025, the combined ratio for the North America Commercial, International Commercial, and Global Personal segments deteriorated by 70, 100, and 430 basis points, respectively.

AIG has also faced catastrophe losses, which have impacted its underwriting margins. In 2023, these losses totaled $1.1 billion, rising 9.4% year over year in 2024 and increasing by 59.4% in the first half of 2025. AIG’s return on equity (ROE) of 7.9% is lower than the industry average of 14.8%, indicating relative inefficiency in generating profits from shareholder funds.

Other Top-Ranked Stocks in the Finance Sector

In addition to AIG, several other stocks in the finance sector have received strong investment ratings. Pagaya Technologies Ltd. (PGY), Heritage Insurance Holdings Inc. (HRTG), and Acadian Asset Management Inc. (AAMI) each carry a Zacks Rank #1 (Strong Buy). These companies are currently showing positive momentum and strong earnings outlooks.

Pagaya Technologies’ current-year earnings are estimated at $2.65 per share, with one upward revision in the past 60 days. The company beat earnings estimates in two of the trailing four quarters, with an average surprise of 23.6%. Revenue is expected to reach $1.3 billion, marking a 28.4% year-over-year increase.

Heritage Insurance Holdings Inc. is projected to report earnings of $4.10 per share, with two upward revisions in the past 60 days. The company has beaten earnings estimates in all four of the trailing quarters, with an average surprise of 360.7%. Revenue is expected to reach $842.2 million, representing a 3.1% year-over-year increase.

Acadian Asset Management Inc. is expected to report earnings of $3.72 per share, with one upward revision in the past 60 days. The company beat earnings estimates in three of the last four quarters, with an average surprise of 15.7%. Revenue is expected to reach $620.9 million, signaling a 22.8% year-over-year growth.