American International Group Financial Model
Insurance Company Financials Example (Free Excel Download)
American International Group (AIG) is a leading global insurance organisation providing property casualty insurance solutions to businesses and individuals in over 200 countries and jurisdictions.
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About this model
This model provides a standalone equity valuation and operational forecast for American International Group (AIG) to determine its intrinsic value as a pure-play global property and casualty insurer following the deconsolidation of its life and retirement business.
American International Group (AIG) is a leading global insurance organisation providing property casualty insurance solutions to businesses and individuals in over 200 countries and jurisdictions. The company underwrites a wide range of commercial and personal insurance products, generating revenue through premium collection and investment income on its float.
AIG operates through three primary business segments: North America Commercial (approximately 45% of net premiums written), International Commercial (approximately 35%), and Global Personal (approximately 20%). The business model is asset-heavy and capital-intensive, relying on disciplined underwriting and the management of a massive fixed-income investment portfolio to generate returns. AIG holds a top-tier competitive position in the global commercial insurance market, competing directly with firms like Chubb, Travelers, and Zurich. Over the last three years, AIG has undergone a massive transformation, most notably the spin-off and June 2024 deconsolidation of Corebridge Financial (its former Life and Retirement segment), the sale of Validus Re in 2023, and the divestiture of its global personal travel business in 2024.
The downloadable American International Group financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsAmerican International Group financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $52.16B | $30.00B | $27.94B | $27.25B | $26.77B |
| General operating and other expenses | $8.79B | $9.20B | $8.50B | $5.53B | $5.05B |
| Total benefits, losses and expenses | $39.96B | $42.16B | $42.94B | $23.38B | $22.90B |
| Net income | $10.37B | $10.23B | $3.64B | -$1.40B | $3.10B |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
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How to build a detailed financial model for American International Group
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
North America Commercial
- Segment name: North America Commercial
- Revenue driver formula: Gross Premiums Written less Reinsurance Ceded equals Net Premiums Written (NPW); NPW is earned over the policy period to calculate Net Premiums Earned (NPE).
- Historical growth rate: 2% to 4% CAGR.
- Key growth levers and headwinds: Driven by mid-teens pricing increases in wholesale and excess casualty lines, offset by softening rates in retail property (down 10% recently) and intense competition in the excess and surplus markets.
- Pricing dynamics: Highly cyclical and competitive, with pricing currently bifurcated between softening property lines and hardening casualty lines.
- Revenue recognition notes: Premiums are recognised as revenue (earned) on a pro-rata basis over the term of the policy. Unearned premiums are held as a liability.
- Seasonality: First and third quarters often see higher commercial renewal volumes; third quarter typically experiences higher catastrophe losses which impacts net underwriting revenue.
International Commercial
- Segment name: International Commercial
- Revenue driver formula: Gross Premiums Written less Reinsurance Ceded equals NPW; NPW amortised over policy life equals NPE.
- Historical growth rate: 1% to 3% CAGR (constant currency).
- Key growth levers and headwinds: Growth in global specialty lines is a tailwind, while higher catastrophe losses in specific international regions and foreign exchange volatility act as headwinds.
- Pricing dynamics: Dynamic and region-specific, with some international lines experiencing rate decreases while specialty lines see moderate growth.
- Revenue recognition notes: Same pro-rata earning curve over the policy period.
- Seasonality: January 1 and April 1 are major renewal dates for international commercial accounts.
Global Personal
- Segment name: Global Personal
- Revenue driver formula: NPW amortised over policy life equals NPE.
- Historical growth rate: Negative 5% to negative 10% recently.
- Key growth levers and headwinds: Premium volume has declined due to strategic divestitures (such as the travel business) and changes to reinsurance structures for the US high-net-worth book to reduce volatility.
- Pricing dynamics: Heavily regulated in many jurisdictions, requiring approval from local insurance commissioners for rate increases.
- Revenue recognition notes: Standard pro-rata premium recognition.
- Seasonality: Relatively stable, though auto and home claims frequency can spike during winter months or hurricane season.
Net Investment Income
- Segment name: Net Investment Income (NII)
- Revenue driver formula: Average Invested Assets multiplied by Annualised Portfolio Yield.
- Historical growth rate: 10% to 15% recent growth due to rising interest rates.
- Key growth levers and headwinds: Benefiting significantly from the reallocation of assets toward higher-yield fixed maturities and loans, achieving an annualised yield of approximately 4.59% in late 2025.
- Pricing dynamics: Dependent on global macroeconomic interest rate environments and credit spreads.
- Revenue recognition notes: Interest and dividends are recognised when earned; realised gains or losses are recognised upon asset sale.
- Seasonality: Generally linear, though alternative investment returns (private equity, hedge funds) are reported on a one-quarter lag and can be lumpy.
Cost Structure
Variable Costs / COGS
- Line-by-line breakdown: For an insurer, the equivalent of COGS is "Losses and Loss Adjustment Expenses" (LAE) and "Policy Acquisition Costs" (broker commissions).
- Gross margin range: Insurers use the "Loss Ratio" (Losses / NPE). AIG's accident year loss ratio typically ranges from 58% to 60%.
- Key input costs and commodity exposures: Claims inflation (social inflation in casualty lines, materials and labour inflation in property lines) and catastrophe frequency.
- How COGS scales with revenue: Losses scale directly with premium volume but are highly volatile due to unpredictable catastrophe events and prior year reserve development.
Operating Expenses
- R&D: Not applicable in the traditional sense, though AIG invests heavily in underwriting technology and generative AI (AIG Assist).
- SG&A: Termed "General Operating Expenses" (GOE). This includes underwriting expenses, IT infrastructure, and parent company overhead.
- Depreciation & Amortisation: Minimal as a percentage of revenue, primarily related to capitalised software and real estate leases.
- Stock-Based Compensation: Typically less than 1% of revenue, used for executive and senior management retention.
- Restructuring / one-time charges: Frequent in recent years due to the "AIG Next" modernisation initiative, which delivered over $500 million in run-rate savings by 2025.
Margin Profile
- Gross margin, EBITDA margin, operating margin, net margin: Insurers use the "Combined Ratio" (Loss Ratio + Expense Ratio). A combined ratio under 100% indicates an underwriting profit. AIG's combined ratio has improved from over 117% in 2017 to 90.1% in 2025.
- Margin trend: Expanding. The expense ratio has dropped to 31.1% in 2025, with management targeting a sub-30% expense ratio by 2027.
- Segment-level margins: North America Commercial is highly profitable (combined ratio around 84.7% in late 2025), while Global Personal runs higher (combined ratio around 94.3%).
Balance Sheet Structure
- Total assets: Approximately $500 billion (consolidated, though shrinking post-Corebridge).
- Key asset categories: Fixed maturity securities, loans, premiums receivable, reinsurance recoverables, and deferred policy acquisition costs (DAC).
- Goodwill & intangibles: Relatively small percentage of total assets, stemming from historical acquisitions like Validus (since divested) and Glatfelter.
- Working capital profile:
- Days Sales Outstanding (DSO): Not applicable. Insurers collect premiums upfront.
- Days Inventory Outstanding (DIO): Not applicable.
- Days Payable Outstanding (DPO): Not applicable.
- Net working capital as % of revenue: Insurers operate with massive negative working capital (float) because they collect premiums upfront and pay claims years later.
- Is working capital positive or negative?: The company funds its investment portfolio using policyholder float.
- PP&E: Immaterial. Mostly corporate real estate and IT hardware.
- Right-of-use assets / operating leases: Material for office space globally but immaterial relative to the massive investment portfolio.
Capital Expenditure & Investment
- Capex as % of revenue: Less than 1%.
- Maintenance capex vs. growth capex: Almost entirely IT infrastructure, data centre maintenance, and software development.
- Major capex programmes underway or planned: AIG Next and the deployment of AIG Assist (a generative AI tool for underwriting and claims).
- Capitalised software / development costs if material: Material within the context of operating expenses, as AIG eliminated 1,200 legacy applications recently.
- M&A pattern: Historically a divestor (Corebridge, Validus, Travel) to simplify the business. Recently pivoting to strategic bolt-ons, such as the 35% equity stake in Convex acquired in early 2026.
- Typical acquisition multiple paid: Varies, typically 1.2x to 1.5x book value for specialty insurance assets.
Debt & Capital Structure
- Total debt: Approximately $10 billion to $12 billion in core parent debt.
- Debt/EBITDA ratio: Insurers use Debt-to-Total-Capital. AIG's total debt to total capital ratio was 18.0% at the end of 2025.
- Credit rating: A-tier ratings (e.g., A+ from S&P for core insurance subsidiaries).
- Key debt instruments: Senior unsecured notes, junior subordinated debt, and a revolving credit facility.
- Maturity profile: Well-laddered, with occasional early retirements funded by divestiture proceeds.
- Interest rate profile: Predominantly fixed-rate senior notes.
- Covenants: Standard financial covenants regarding maximum debt-to-capital ratios and minimum net worth.
- Share repurchase programme: Highly active. AIG repurchased $5.8 billion of common stock in 2025 (approximately 73 million shares).
- Dividend policy: Progressive. AIG paid $1.0 billion in dividends in 2025, increasing the quarterly payout by 12.5% to $0.45 per share.
Cash Flow Characteristics
- Operating cash flow conversion: Highly variable due to the timing of catastrophe claim payouts and reserve development.
- Free cash flow margin: Insurers focus on "Parent Company Liquidity" and "Subsidiary Dividends" rather than traditional FCF. AIG expects approximately $3.0 billion of subsidiary dividends in 2025.
- Major non-cash items: Amortisation of deferred acquisition costs, unrealised gains or losses on the retained Corebridge stake, and changes in loss reserves.
- Working capital cash flow impact: Growth in net premiums written generates immediate cash inflow (float generation).
- Capex intensity: Extremely low.
- Cash tax rate vs. GAAP effective tax rate: Often differs due to tax-exempt municipal bond interest and the utilisation of historical tax loss carryforwards.
Sheet Structure
- Assumptions: Hardcoded inputs for macroeconomic variables, segment-level premium growth, loss ratios, expense ratios, investment yields, and capital return targets.
- Premiums & Underwriting: A roll-forward of Gross Premiums Written to Net Premiums Written to Net Premiums Earned for North America Commercial, International Commercial, and Global Personal.
- Losses & Reserves: Calculation of incurred losses based on segment loss ratios, plus a schedule for catastrophe loads and prior year reserve development.
- Investment Portfolio: Roll-forward of the fixed income and alternative asset base, applying yield assumptions to calculate Net Investment Income.
- Income Statement: Consolidated view mirroring the 10-K. NPE plus NII, less Losses and LAE, less Policy Acquisition Costs, less General Operating Expenses equals Pre-tax Income.
- Balance Sheet: Total Investments, Premiums Receivable, Reinsurance Recoverables, DAC, Loss Reserves, Unearned Premium Reserve, Debt, and Shareholders' Equity (split between Retained Earnings and AOCI).
- Cash Flow Statement: Net Income adjusted for non-cash items (reserve changes, UPR changes, DAC amortisation) to calculate Operating Cash Flow, followed by Investing and Financing cash flows.
- Capital & Dividends: Schedule tracking parent company liquidity, subsidiary dividend capacity, share repurchases, and common dividends.
- Valuation: Dividend Discount Model (DDM) based on projected parent company cash flows, alongside a Price-to-Book (excluding AOCI) multiple valuation.
Key Financial Relationships
- `North America Commercial NPE = Prior Period Unearned Premium Reserve + Current Period NPW - Ending Unearned Premium Reserve`
- `Consolidated Net Premiums Earned = North America Commercial NPE + International Commercial NPE + Global Personal NPE`
- `Segment Incurred Losses = Segment NPE * Segment Accident Year Loss Ratio`
- `Total Losses and LAE = Sum of Segment Incurred Losses + Catastrophe Losses + Prior Year Development`
- `Policy Acquisition Costs = Consolidated NPE * Acquisition Expense Ratio`
- `General Operating Expenses = Consolidated NPE * General Operating Expense Ratio`
- `Combined Ratio = (Total Losses and LAE + Policy Acquisition Costs + General Operating Expenses) / Consolidated NPE`
- `Underwriting Income = Consolidated NPE * (1 - Combined Ratio)`
- `Net Investment Income = Average Total Investments * Annualised Investment Yield`
- `Adjusted Pre-Tax Income = Underwriting Income + Net Investment Income + Other Income - Interest Expense`
- `Ending Loss Reserves = Beginning Loss Reserves + Total Losses and LAE - Paid Claims`
- `Ending Share Count = Beginning Share Count - (Share Repurchase Amount / Average Share Price)`
Cross-Sheet Dependencies
- The Assumptions sheet dictates the growth and margin profiles on the Premiums & Underwriting and Losses & Reserves sheets.
- Premiums & Underwriting feeds the top line of the Income Statement and drives the Unearned Premium Reserve on the Balance Sheet.
- Losses & Reserves feeds the expense line on the Income Statement and the Loss Reserve liability on the Balance Sheet.
- The Investment Portfolio calculates NII for the Income Statement and updates Total Investments on the Balance Sheet.
- The Income Statement generates Net Income, which flows into the Cash Flow Statement and updates Retained Earnings on the Balance Sheet.
- The Capital & Dividends sheet determines the share count for EPS calculations on the Income Statement and reduces cash and equity on the Balance Sheet.
- Circularity risk exists between the Investment Portfolio (which generates NII) and the Cash Flow Statement (which dictates how much new cash is added to the investment portfolio). This requires a toggle to break the circular reference.
Sign Convention
- Revenue, Premiums Written, and Premiums Earned are entered and displayed as positive numbers.
- Expenses (Losses, Acquisition Costs, GOE) are entered as positive numbers in their respective schedules but subtracted in the Income Statement formulas.
- On the Cash Flow Statement, cash inflows are positive and cash outflows (including share repurchases and dividends) are negative.
- Reserve additions are positive liabilities; claim payouts reduce the liability (negative adjustment to the reserve balance).
Things Most Likely to Go Wrong
- The deconsolidation of Corebridge Financial in June 2024 means historical consolidated financials prior to Q3 2024 include Life and Retirement data. The model must strictly use "Continuing Operations" or comparable basis figures for historical benchmarking.
- Accumulated Other Comprehensive Income (AOCI) swings wildly with interest rate movements due to the mark-to-market of the massive fixed-income portfolio. Valuation metrics must use "Book Value excluding AOCI".
- Prior Year Development (PYD) can distort the current year loss ratio. The model must separate the "Accident Year Loss Ratio" from calendar year PYD adjustments.
- Catastrophe losses are inherently unpredictable. Failing to include a normalised "cat load" (typically 300 to 400 basis points on the combined ratio) will artificially inflate projected underwriting income.
- The retained 10.1% stake in Corebridge (as of late 2025) is subject to mark-to-market accounting through the income statement, creating non-operating earnings volatility.
- Foreign currency translation can swing International Commercial revenue by 2% to 4% year-over-year.
- The expense ratio calculation must accurately capture the absorption of corporate overhead previously allocated to divested units.
- Subsidiary dividend capacity is regulated by statutory accounting, not GAAP. Assuming 100% of GAAP net income can be upstreamed to the parent company will overstate share repurchase capacity.
Validation Checks
- The Consolidated Combined Ratio should remain between 88% and 92%; flag if it drops below 85% or exceeds 95%.
- The General Operating Expense Ratio should trend downward toward the management target of 30.0% by 2027.
- Total Debt to Total Capital must remain between 15% and 22% to align with rating agency expectations.
- The Balance Sheet must balance perfectly in every period: Total Assets equals Total Liabilities plus Shareholders' Equity.
- Net Investment Income yield should reasonably track the assumed fixed-income yield (approximately 4.5% to 4.7%).
- Share repurchases should not exceed Parent Company Liquidity plus projected Subsidiary Dividends.
- Premium growth should not exceed 5% without a specific hardcoded override, as mature commercial insurance markets grow slowly.
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| North America Commercial NPW Growth | 3.0 | % | Reflects recent 2.8% to 4.0% growth driven by casualty rate increases offsetting property declines. |
| International Commercial NPW Growth | 2.0 | % | Aligns with recent low-single-digit constant currency growth. |
| Global Personal NPW Growth | -2.0 | % | Reflects ongoing portfolio optimisation and recent divestitures. |
| Consolidated Accident Year Loss Ratio | 59.0 | % | Based on recent historical averages excluding catastrophe volatility. |
| Catastrophe Loss Load | 3.5 | % | Normalised expectation for natural disaster impacts on the combined ratio. |
| Policy Acquisition Expense Ratio | 16.5 | % | Standard broker commission run-rate for the current business mix. |
| General Operating Expense Ratio | 14.5 | % | Drives total expense ratio to ~31.0%, trending toward the sub-30% target. |
| Investment Portfolio Yield | 4.6 | % | Based on the 4.59% annualised yield reported in late 2025. |
| Effective Tax Rate | 21.0 | % | Standard US corporate rate, adjusted slightly for international mix. |
| Annual Share Repurchases | 5,000 | $ Millions | Aligns with the $5.8 billion executed in 2025 and management guidance. |
| Annual Dividend per Share | 1.80 | $ | Based on the $0.45 quarterly dividend established in 2025. |
| Cost of Equity (Ke) | 9.5 | % | Standard assumption for a large-cap, well-capitalised P&C insurer. |
| Target Debt to Capital Ratio | 18.0 | % | Matches the actual reported ratio at the end of 2025. |
Data Sources & Benchmarks
- Filings: AIG Investor Relations website, SEC EDGAR for 10-K and 10-Q filings, and quarterly financial supplements.
- Key peers for benchmarking: Chubb (CB), The Travelers Companies (TRV), Zurich Insurance Group (ZURVY), and Hartford Financial Services (HIG).
- Industry data sources: AM Best for insurance rating and statutory data, Swiss Re Sigma reports for global catastrophe loss trends, and CIAB (Council of Insurance Agents & Brokers) for commercial P&C pricing indices.
- Consensus estimates source: Bloomberg or FactSet for forward-looking EPS and combined ratio consensus.
Sources
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Frequently asked
What is American International Group's core business after its recent transformations?+
American International Group (AIG) is a leading global property and casualty insurer. Following the spin-off of Corebridge Financial and other divestitures, it now focuses on providing commercial and personal insurance solutions worldwide.
How does American International Group generate its revenue?+
AIG generates revenue primarily through the collection of premiums from its wide range of commercial and personal insurance products. Additionally, it earns investment income on the substantial policyholder float it manages.
What is the projected capital expenditure for American International Group in its financial model?+
The financial model assumes AIG's capital expenditure as a percentage of revenue is less than 1%. This spending is almost entirely directed towards IT infrastructure, data center maintenance, and software development, including initiatives like AIG Next and AIG Assist.
What is the main purpose of the financial model for American International Group?+
The model provides a standalone equity valuation and operational forecast for AIG. Its primary goal is to determine the intrinsic value of AIG as a pure-play global property and casualty insurer, especially after the deconsolidation of its life and retirement business.
Is a downloadable financial model available for American International Group?+
Yes, a downloadable Excel financial model is available for American International Group. This model offers an operational forecast and equity valuation for the company, covering a forecast horizon from FY2026 to FY2030.
How does American International Group manage its working capital?+
As an insurer, AIG operates with massive negative working capital, often referred to as policyholder float. This occurs because premiums are collected upfront, while claims are paid out years later, allowing the company to fund its significant investment portfolio.
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