Here's Why You Should Add AIG Stock to Your Portfolio Now

American International Group, Inc. AIG is a global insurance company that provides property casualty insurance, life insurance, retirement solutions and other financial services to customers in more than 200 countries and jurisdictions. It offers products and services that help businesses and individuals protect their assets, manage risks and provide retirement security. AIG has risen 8.4% in the year-to-date period, outperforming the industry average of 7.1%.

Headquartered in New York, AIG holds a market capitalization of $43.4 billion. The company operates in three 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, indicating growing investor confidence.

Courtesy of solid prospects, AIG currently carries a Zacks Rank #2 (Buy).

Where Do Estimates for AIG Stand?

The Zacks Consensus Estimate for American International’s 2025 earnings is pegged at $6.34 per share, indicating a 28.1% year-over-year rise. In the past 30 days, it has witnessed one upward estimate revision against none in the opposite direction. Furthermore, the consensus mark for revenues is pegged at $27.6 billion for 2025. It beat earnings estimates in each of the past four quarters, with an average surprise of 9.5%.

American International Group, Inc. Price and EPS Surprise

American International Group, Inc. price-eps-surprise | American International Group, Inc. Quote

AIG’s Growth Drivers

The company’s revenues benefited from increased net premium written (NPW), high retentions and new business generation. This, in turn, continues to drive the General Insurance segment. AIG’s North America Commercial segment’s NPW rose 6.7% year over year, while its International Commercial segment’s NPW grew 3.1% year over year in the first half of 2025.

Tata AIG, the company’s high-growth business, recorded a compounded annual growth rate of 20% from 2020 to 2025, outperforming the industry. AIG expects to continue rise at the same compounded annual growth rate through 2030. It expects to witness incremental growth led by the Western World, Lexington Middle Market and its other alternative businesses in 2025.

AIG is set to launch AIG underwriter assistance for Lexington Middle Market, Property & Casualty businesses in the third quarter of 2025, with a wider rollout across North America Commercial, the U.K. and EMEA Commercial lines in 2026. As the company scales Gen AI across underwriting, it is also developing AIG claims assistance.

American International's expense ratio, on a comparable basis, is improving courtesy of an alteration in business mix, ongoing expense discipline and an improved premium base. These initiatives will lead to operational efficiency and provide an extra boost to its operating margins. Total benefits, losses and expenses declined 2.4% year over year in the first half of 2025 on the back of lower general operating and other expenses.

AIG’s robust cash generation abilities have enabled it to continue elevating shareholder value through share buybacks and dividend payouts. In the first half of 2025, the company rewarded its shareholders with share buybacks of $4 billion and dividends of $488 million. Additionally, from July 1 to Aug. 1, 2025, it repurchased shares worth $467 million again. Its leverage ratio has been improving, with a total debt to capital of 18.2% at the second quarter-end, remaining below the industry’s average of 34.2%.

Risks for AIG Stock

There are some factors, however, that investors should keep a careful eye on.

AIG grapples with a deteriorating combined ratio within its business lines, resulting from California wildfires. In the first half of 2025, the combined ratio for the North America Commercial, the International Commercial and the Global Personal business line segments deteriorated 70 basis points (bps), 100 bps and 430 bps year over year, respectively.

AIG has incurred catastrophe losses over the years, which have weighed on its underwriting margins. In 2023, it witnessed catastrophe losses of $1.1 billion, which escalated 9.4% year over year in 2024 and increased 59.4% in the first half of 2025. The company's ROE of 7.9% is lower than the industry average of 14.8%. This reflects AIG's relative inefficiency in utilizing shareholders’ funds to generate profits.

Other Key Picks

Some other top-ranked stocks in the broader finance space are Pagaya Technologies Ltd. PGY, Heritage Insurance Holdings Inc. HRTG and Acadian Asset Management Inc. AAMI, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Pagaya Technologies’ current-year earnings of $2.65 per share has witnessed one upward revision in the past 60 days against none in the opposite direction. Pagaya Technologies beat earnings estimates in two of the trailing four quarters and missed twice, with the average surprise being 23.6%. The consensus estimate for current-year revenues is pegged at $1.3 billion, implying 28.4% year-over-year growth.

The Zacks Consensus Estimate for Heritage Insurance’s current-year earnings of $4.10 per share has witnessed two upward revisions in the past 60 days against no movement in the opposite direction. Heritage Insurance beat earnings estimates in each of the trailing four quarters, with the average surprise being 360.7%. The consensus estimate for current-year revenues is pegged at $842.2 million, calling for 3.1% year-over-year growth.

The Zacks Consensus Estimate for Acadian Asset Management’s current-year earnings is pegged at $3.72 per share and has witnessed one upward revision in the past 60 days against no movement in the opposite direction. Acadian Asset Management beat earnings estimates in three of the trailing four quarters and met once, with the average surprise being 15.7%. The consensus estimate for current-year revenues is pegged at $620.9 million, calling for 22.8% year-over-year growth.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research