How Does AIG Company Work?

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How does the AIG company work?

American International Group (AIG) is a major global insurance organization that is currently undergoing a significant strategic transformation. In 2024, the company demonstrated strong financial performance, reporting net premiums written of $23.9 billion. Its General Insurance combined ratio was 91.8%, marking the third consecutive year below 92%, and adjusted after-tax income per diluted share saw a notable 28% increase on a comparable basis for 2024.

AIG offers a wide array of insurance products and services, including property casualty insurance, life insurance, and retirement solutions. These offerings cater to a broad spectrum of clients, from individuals to large corporations, and are available in over 80 countries and jurisdictions. The company's strategic focus has been sharpened, particularly following the deconsolidation of Corebridge Financial in 2024, positioning it as a global general insurance business with improved financial flexibility and a clear path for future expansion.

Understanding how AIG company operations function is key for anyone interested in the financial services sector. The company's business model relies on a diversified portfolio of insurance and financial products, enabling it to generate revenue through premiums, investment income, and fees. AIG insurance services are designed to meet a variety of needs, from protecting assets with property and casualty insurance to providing long-term financial security through life insurance coverage and retirement plans. The company's global presence allows it to tap into diverse markets and manage risk across its subsidiaries effectively. Explaining AIG's property and casualty insurance operations, for instance, involves understanding how it underwrites policies for businesses and individuals against potential losses. Similarly, how does AIG provide life insurance coverage? It does so by offering policies that provide financial benefits to beneficiaries upon the insured's death. The company's investment strategies are crucial to its profitability, as it invests the premiums it collects to generate returns that help offset claims and operational costs. This approach is fundamental to understanding how AIG insurance company makes money. The role of AIG in the global financial market is substantial, contributing to economic stability by providing essential risk management tools and facilitating capital flow. The history and evolution of AIG company show a consistent adaptation to market changes and a commitment to innovation. Understanding AIG's corporate structure functions helps to see how its various divisions collaborate to deliver its comprehensive suite of AIG financial products. For those seeking to engage with the company, exploring career opportunities at AIG reveals a dynamic environment focused on growth and client service. The regulatory frameworks governing AIG are complex, ensuring that the company operates responsibly and maintains the trust of its customers and stakeholders. Ultimately, how does AIG approach customer service? It emphasizes responsiveness and efficiency, particularly in its claims processing, ensuring policyholders receive timely and fair settlements.

The AIG company operations are primarily centered around its global general insurance business, which is structured into three key segments: North America Commercial, International Commercial, and Global Personal. This structure allows AIG to deliver a broad spectrum of property and casualty insurance products designed to cover various risks for both businesses and individuals across the globe. These offerings include protection against property damage, liability, and other specialized risks.

Beyond general insurance, AIG also provides life insurance and retirement solutions. However, its life and retirement arm, Corebridge Financial, underwent a significant strategic shift in 2024, with AIG reducing its ownership stake to 22.7% by the end of the year. This move signifies a focus on refining its core insurance services and optimizing its business portfolio.

North America Commercial Insurance

This segment focuses on providing a wide range of insurance products to businesses within North America. In the first quarter of 2025, it experienced robust growth, with net premiums written increasing by 14%. This expansion was notably driven by strong performance from Lexington Insurance and significant contributions from property and specialty lines of business.

International Commercial Insurance

Serving commercial clients outside of North America, this segment also demonstrated healthy growth. On a comparable basis, it saw an 8% increase in net premiums written. This indicates a solid global demand for AIG's commercial insurance solutions and its ability to effectively serve diverse international markets.

Global Personal Insurance

This segment caters to the insurance needs of individuals worldwide. It encompasses a variety of personal insurance policies designed to protect individuals and their assets. The value proposition here lies in offering tailored solutions that address the unique risk exposures faced by individuals in different regions.

Value Proposition: Underwriting and Claims Excellence

AIG's core value proposition is built upon its deep underwriting expertise and technical capabilities. This allows the company to develop innovative risk solutions and provide superior claims service. The company's operational processes involve sophisticated risk assessment and pricing, supported by a global infrastructure that enables customized solutions for local markets.

The company's commitment to technological advancement is a key driver of its operational efficiency and future growth. AIG is making substantial investments in data and digital strategies, including the integration of Generative AI (GenAI) into its underwriting and claims processes. Initiatives like AIG Underwriter Assistance are designed to enhance decision-making and boost efficiency, aiming to 'turbocharge' growth in its specialty business by enabling underwriters to process a greater volume of submissions more effectively. Furthermore, AIG strategically utilizes reinsurance to manage underwriting volatility and optimize capital. An example of this is the launch of Syndicate 2478 at Lloyd's in January 2025, supported by Blackstone, which further strengthens its risk management capabilities.

Strategic Investments and Partnerships

AIG's strategic approach involves leveraging partnerships and investments to enhance its operational effectiveness and market position. These collaborations are crucial for navigating the complexities of the insurance industry and expanding its service offerings.

• Investment in data and digital strategies, including GenAI integration.
• Partnerships to enhance underwriting and claims processing efficiency.
• Strategic use of reinsurance to manage risk and capital.
• Collaboration with entities like Blackstone for specialized ventures.
• Focus on tailoring solutions to local market needs while leveraging global experience.

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AIG company operations are primarily driven by two core revenue streams: net premiums written and net investment income. These form the bedrock of how AIG works, enabling the company to underwrite risks and generate returns for its stakeholders. Understanding these components is key to grasping the AIG business model.

Net premiums written represent the money AIG collects from policyholders for insurance coverage, minus any reinsurance costs. This figure reflects the volume and pricing of the insurance policies AIG sells across its various product lines. Net investment income, on the other hand, comes from the returns AIG earns on its vast portfolio of invested assets, which are built from premiums collected and capital.

In 2024, AIG saw robust growth in its net premiums written, reaching $23.9 billion, marking a 6% increase on a comparable basis from the previous year. This growth was particularly strong in the Global Commercial business, which experienced a 7% increase in net premiums written on a comparable basis and achieved a record $4.5 billion in new business. For the first quarter of 2025, despite an overall reported revenue dip to $6.62 billion due to the deconsolidation of Corebridge, the General Insurance segment demonstrated resilience. Net premiums written in General Insurance were flat year-over-year at $4.5 billion on a reported basis, but showed an 8% increase on a comparable basis, largely fueled by an 10% growth in Global Commercial business.

Net Premiums Written Growth

In 2024, AIG's net premiums written reached $23.9 billion, a 6% comparable increase. The Global Commercial business saw a 7% comparable increase in net premiums written.

Q1 2025 General Insurance Performance

General Insurance net premiums written were flat at $4.5 billion reported in Q1 2025. However, on a comparable basis, they increased by 8%, driven by Global Commercial growth.

Net Investment Income

Net investment income increased in 2024 due to asset reallocation to higher-yield investments. In Q1 2025, it reached $1.1 billion, exceeding estimates.

Monetization Strategies

AIG focuses on disciplined underwriting, risk-adjusted returns, and expense management. Initiatives like 'AIG Next' aim for significant expense savings.

Expense Management

'AIG Next' achieved $450 million in exit run-rate savings in 2024. The company targets parent company expense levels of 1% to 1.5% of net premiums earned by the end of 2025.

Capital Returns to Shareholders

AIG returned $8.1 billion to shareholders in 2024 via share repurchases and dividends. In Q1 2025, approximately $2.5 billion was returned, including a 12.5% dividend increase.

Financial Performance and Shareholder Value

AIG's monetization strategies are further supported by its commitment to robust capital management, directly impacting shareholder value and demonstrating the effectiveness of its Growth Strategy of AIG. This approach ensures that the company not only generates strong operating results but also effectively deploys capital to reward its investors.

• Net premiums written for the full year 2024 were $23.9 billion.
• Global Commercial net premiums written increased by 7% on a comparable basis in 2024.
• Total net investment income in Q1 2025 was $1.1 billion.
• 'AIG Next' achieved $450 million in exit run-rate savings in 2024.
• AIG returned $8.1 billion to shareholders in 2024.
• In Q1 2025, AIG returned approximately $2.5 billion to shareholders.
• The quarterly common stock dividend increased by 12.5% to $0.45 per share.

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AIG has navigated a significant multi-year transformation, marked by key milestones that have redefined its operational focus and financial standing. A pivotal strategic move was the deconsolidation of its life and retirement business, Corebridge Financial, in 2024. This strategic separation included the sale of a 21.6% stake to Nippon Life Insurance Company for $3.8 billion, a move that concluded four years of meticulous planning. This action has positioned AIG as a more focused global general insurance business, aiming to unlock shareholder value through more targeted capital allocation.

The company has demonstrated resilience in addressing operational and market challenges, including elevated catastrophe losses, by upholding underwriting discipline and strategically deploying capital. While industry catastrophe losses have averaged $140 billion over the past eight years, with 2024 alone seeing $145 billion in losses, AIG has significantly reduced its exposure. Its share of industry catastrophe losses has fallen from 3% in 2018 to below 1% for the last three consecutive years. Another strategic initiative was the launch of Syndicate 2478 at Lloyd's in December 2024, which began underwriting on January 1, 2025. This syndicate is supported by third-party capital from Blackstone, establishing a long-term reinsurance partner and creating an additional stream of fee income.

Focus on General Insurance Operations

AIG's strategic deconsolidation of its life and retirement business in 2024 has sharpened its focus on general insurance. This move aims to streamline operations and enhance capital efficiency within its core insurance services. The company is now better positioned to leverage its expertise in property and casualty insurance.

Managing Catastrophe Risk Effectively

AIG has implemented strategies to mitigate the impact of significant industry catastrophe losses. By maintaining underwriting discipline and reducing its proportional share of these losses, the company demonstrates a robust approach to risk management. This is crucial for understanding how AIG manages risk across its subsidiaries.

Leveraging Technology for Innovation

The company is investing heavily in technology, particularly in the integration of Generative AI (GenAI) into its underwriting and claims processes. Partnerships with leading AI firms are driving innovation, aiming to improve efficiency and refine risk pricing models. This technological advancement is key to explaining AIG's property and casualty insurance operations.

Strengthening Financial Health

Disciplined capital management is a cornerstone of AIG's strategy, evidenced by its debt reduction efforts. By reducing debt and maintaining a healthy debt-to-total capital ratio, the company strengthens its balance sheet. This financial prudence is vital for understanding AIG's investment strategies and its role in the global financial market.

AIG's competitive advantages are built upon a strong brand reputation and a significant global presence spanning over 80 countries. Its diversified product portfolio, now concentrated on general insurance, is complemented by substantial investments in technology. The company's commitment to integrating GenAI in underwriting and claims, through collaborations with Anthropic and Palantir, serves as a key differentiator, driving innovation, efficiency, and improved risk pricing. This focus on technology is central to how AIG works and how does AIG insurance company make money. Furthermore, AIG has actively managed its capital, reducing debt by $1.6 billion in 2024 and achieving a debt-to-total capital ratio of 17.0% by year-end, reinforcing its financial stability. The company's strategic decisions reflect a commitment to sustainable growth and value creation for its stakeholders, including its Owners & Shareholders of AIG.

Key Competitive Strengths

AIG's competitive edge is multifaceted, combining its global reach with technological innovation and financial discipline.

• Extensive global presence in over 80 countries.
• Diversified general insurance product portfolio.
• Significant investment in GenAI for underwriting and claims.
• Disciplined capital management and debt reduction.

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AIG holds a significant standing as a prominent entity within the global insurance sector, recognized for its underwriting capabilities and extensive international reach. The company is actively adapting to a dynamic competitive environment populated by other major insurers. While precise market share figures relative to competitors are not consistently detailed in recent public disclosures, AIG's Global Commercial business has shown strong performance, with net premiums written increasing by 7% in 2024 and 10% in Q1 2025 on a comparable basis. This customer loyalty is bolstered by a client-focused strategy and the provision of customized solutions, reflecting how AIG company operations are geared towards client needs.

Understanding how AIG works involves recognizing the inherent risks within the insurance industry. These include the potential impact of regulatory shifts, the constant pressure from market competition, and substantial exposure to catastrophic events. For example, Q1 2025 recorded total catastrophe-related charges amounting to $525 million, primarily attributed to wildfires in California during January. The CEO has highlighted that a year with $200 billion in annual catastrophe losses for 2025 could significantly alter the industry landscape, underscoring the increasing risk retention by primary insurers. Furthermore, pricing pressures, particularly within financial lines of business, present ongoing challenges.

Industry Position and Competitive Landscape

AIG is a major global insurer, competing with other large industry players. Its Global Commercial business saw net premiums written grow by 7% in 2024 and 10% in Q1 2025. The company's strategy emphasizes customer loyalty through tailored solutions.

Key Risks and Challenges

Significant risks for AIG include regulatory changes, intense competition, and exposure to catastrophic events. Q1 2025 saw $525 million in catastrophe charges, mainly from California wildfires. Pricing pressures in financial lines also pose a challenge.

Future Outlook and Strategic Initiatives

AIG aims to sustain and grow profitability through strategic actions. The company is on track for a 10%+ core operating return on equity for 2025. Key priorities include integrating GenAI and streamlining operations.

Operational Efficiency and Growth Drivers

The company targets a parent company expense ratio of 1% to 1.5% by the end of 2025. AIG's leadership focuses on underwriting excellence and a strong balance sheet to manage future complexities and seize opportunities.

Strategic Focus for Profitability

AIG is committed to enhancing its profitability through strategic initiatives. The company's focus on underwriting excellence and technological integration, such as GenAI, aims to improve precision in underwriting and claims management.

• Targeting 10%+ core operating return on equity for 2025.
• Integrating GenAI for underwriting and claims management.
• Streamlining operations to achieve a 1% to 1.5% parent company expense ratio by end of 2025.
• Maintaining a strong balance sheet to navigate market challenges.

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