AIG Posts Blowout Q1 2026 Results: Adjusted EPS $2.11 (+80% YoY), ROE 12.2%

What happened

AIG reported Q1 2026 adjusted after-tax income per share of $2.11, up 80% year-over-year, and a Core Operating ROE of 12.2%, citing strong underwriting momentum. The quarter benefited from continued favorable catastrophe experience and prior-year development, consistent with the pattern our analysis flagged as reliant on transient factors. While headline numbers are impressive, the underlying accident-year combined ratio likely remained in the high-80s, meaning the beat again came from low cats and reserve releases rather than fundamental margin expansion. AIG's new CEO Eric Andersen is set to take over in June 2026, and sustaining this performance through a more normalized loss environment will be the true test. The results support the bullish scenario in our framework but do not change our WAIT stance given the valuation at ~1x book and the need to see underwriting durability through the cycle.

Implication

The Q1 beat validates AIG’s operational momentum but does not shift our cautious view. Adjusted EPS of $2.11 (+80% YoY) and 12.2% core ROE suggest the company is executing well, but the quarter again benefited from low catastrophe losses and favorable prior-year development—the same transient tailwinds that have padded recent results. The underlying accident-year combined ratio remains in the high-80s, and with CEO transition imminent, the risk remains that normalized cat loads and reserve releases will pressure margins. At ~1x book, the stock already prices in low-teens ROE; we see limited upside until AIG proves it can sustain high-80s combined ratios without these aids. Reiterate WAIT with attractive entry at $65.

Thesis delta

Q1 results are in line with our bull case but do not alleviate concerns about earnings sustainability. The reliance on low cats and favorable development persists, and the CEO transition adds execution risk. Our call remains WAIT; we need to see normalized underwriting performance before upgrading.