AIG

AIG is a scaled global P&C insurer with a strengthened core after shedding non-core earnings (Corebridge was deconsolidated in June 2024). Underwriting discipline is the moat: 2025 delivered over $2B of underwriting income with a 90.1% calendar-year combined ratio and 88.3% accident-year combined ratio, suggesting pricing/risk selection is translating into durable profitability. Recent partnerships (Lloyd’s syndicate with Amwins/Blackstone and data-driven underwriting tooling) should help expand specialty distribution and risk analytics, but execution and cycle timing matter in a competitive commercial market.

Financially, momentum is clear: 2025 adjusted after-tax income per diluted share rose 43% to $7.09 and core operating ROE reached 11.1%. At about $75/share, AIG trades near 13.4x EPS with a market cap around $43.5B, and pays a $1.80 annual dividend (~2.3–2.4% yield), which looks covered by earnings. Key watch item is investment income sensitivity and any adverse reserve/cat volatility that could reverse combined-ratio gains.

Base case for the next 12 months is mid-teens total return potential if underwriting stays sub-90 combined ratio and capital return continues. Catalysts include follow-through on ROE improvement, sustained rate/retention in Global Commercial, and incremental earnings from new distribution/structured partnerships. Risks are elevated catastrophe losses, reserve strengthening, and a softer pricing environment compressing margins.

Recommendation: BUY. The call rests on demonstrably improved underwriting/ROE with reasonable valuation, plus shareholder return support via a covered dividend and likely ongoing buybacks.