American International Group Inc. (NYSE:AIG) reported its fourth-quarter 2024 earnings, posting an earnings per share (EPS) of $1.30, slightly surpassing the forecast of $1.28. Revenue for the quarter came in at $6.76 billion, falling short of the expected $6.79 billion. Following the earnings release, AIG’s stock price decreased by 2.63% in after-hours trading, reflecting investor concerns over the revenue miss despite the EPS beat. According to InvestingPro, AIG maintains a "GOOD" Financial Health score of 2.68 out of 5, with particularly strong price momentum metrics. Analysis suggests the stock is currently undervalued based on comprehensive Fair Value calculations.
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Key Takeaways
- AIG’s EPS of $1.30 beat the forecast of $1.28.
- Revenue fell short of expectations at $6.76 billion.
- Stock price dropped by 2.63% in after-hours trading.
- AIG achieved a full-year adjusted after-tax income increase of 28% year-over-year.
- The company is targeting a 10%+ core operating return on equity (ROE) for 2025.
Company Performance
AIG reported a strong performance for the full year of 2024, with adjusted after-tax income reaching $3.3 billion, a 28% increase year-over-year. The company’s core operating return on equity stood at 9.1% for both the fourth quarter and the full year, with a target to exceed 10% in 2025. AIG’s general insurance net premiums written grew by 6% to $23.9 billion, reflecting robust demand in the insurance market. InvestingPro data reveals management has been aggressively buying back shares, and the company has maintained dividend payments for 12 consecutive years, with an attractive current dividend yield of 2.11%.
Financial Highlights
- Revenue: $6.76 billion, below the forecast of $6.79 billion.
- Earnings per share: $1.30, surpassing the forecast of $1.28.
- Full-year adjusted after-tax income: $3.3 billion, a 28% increase year-over-year.
- General insurance net premiums written: $23.9 billion, up 6% year-over-year.
Earnings vs. Forecast
AIG’s EPS of $1.30 slightly exceeded the forecasted $1.28, marking a positive surprise of approximately 1.56%. However, revenue fell short by $30 million, a minor miss that may have contributed to the negative market reaction. Historically, AIG has shown consistent growth, and this quarter’s EPS beat aligns with its recent performance trends.
Market Reaction
Despite the EPS beat, AIG’s stock declined by 2.63% in after-hours trading, closing at $75.93. This movement reflects investor concerns over the revenue miss and broader market trends. The stock remains within its 52-week range of $68.05 to $80.83, indicating room for recovery. InvestingPro analysis shows analyst targets ranging from $75 to $96, suggesting potential upside, while the company’s beta of 1.07 indicates slightly higher volatility than the market.
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Outlook & Guidance
AIG remains optimistic about its future, targeting a core operating ROE of over 10% for 2025. The company plans to continue share repurchases, with $3.4 billion remaining from its $10 billion authorization. An anticipated dividend increase and a focus on profitable growth and capital allocation are also on the agenda. However, InvestingPro data indicates seven analysts have revised their earnings downwards for the upcoming period, with expectations of a sales decline in the current year.
Executive Commentary
CEO Peter Zaffino expressed confidence in achieving a 10%+ core operating ROE for 2025, emphasizing the company’s focus on growth and data utilization. "Our focus has always been on driving growth... it’s all about ingestion of data," Zaffino stated. He also highlighted AIG’s disciplined approach to mergers and acquisitions, ensuring any potential deals are additive to the company’s value.
Risks and Challenges
- Revenue shortfalls may continue to impact investor sentiment.
- Potential increases in insured natural catastrophe losses could affect profitability.
- Market volatility and economic uncertainties may pose challenges to growth targets.
- Regulatory changes and competitive pressures in the insurance industry.
- The impact of California wildfires, with estimated losses between $40-$50 billion, remains a concern.
Q&A
During the earnings call, analysts inquired about the impact of California wildfires on AIG’s operations and financials. The company confirmed that its 10% ROE guidance accounts for potential wildfire impacts. Questions also focused on AIG’s use of AI for data ingestion and underwriting efficiency, with executives optimistic about leveraging technology for improved performance.
Full transcript - American International Group (AIG) Q4 2024:
Michelle, Conference Call Operator: Good day, and welcome to AIG’s Fourth Quarter and Full Year twenty twenty four Financial Results Conference Call. This conference is being recorded. Now at this time, I would like to turn the conference over to Quentin McMillan. Please go ahead.
Quentin McMillan, Unspecified Executive, AIG: Thanks very much, Michelle, and good morning. Today’s remarks may include forward looking statements, which are subject to risks and uncertainties. These statements are not guarantees of future performance or events and are based on management’s current expectations. AIG’s filings with the SEC provide details on important factors that could cause actual results or events to differ materially. Except as required by applicable securities laws, AIG is under no obligation to update any forward looking statements if circumstances or management’s estimates or opinions should change.
Today’s remarks may also refer to non GAAP financial measures. The reconciliation of such measures to the most comparable GAAP figures is included in our earnings release, financial supplement and earnings presentation, all of which are available on our website at aig.com. Following the deconsolidation of Corbridge Financial on 06/09/2024, the historical results of Corbridge for all periods presented are reflected in AIG’s consolidated financial statements as discontinued operations in accordance with U. S. GAAP.
Additionally, in the fourth quarter, AIG realigned its organizational structure and the composition of its reportable segments to reflect changes in how AIG manages its operations, which our Chief Financial Officer, Keith Walsh, will discuss in detail during his remarks. Finally, today’s remarks related to AIG’s adjusted after tax income per diluted share as well as general insurance results, including key metrics such as underwriting income, margin and net investment income are presented on a comparable basis, which reflects year over year comparison adjusted for the sale of Crop Risk Services and the sale of Validus Re as applicable. Net premiums written and net premiums earned are also presented on a comparable basis, which reflects year over year comparison on a constant dollar basis and adjusted for the sales of Crop Risk Services, Validus Re and the global personal travel and assistance business as applicable. We believe this presentation provides the most useful view of our results and the go forward business in light of the substantial changes to the portfolio since 2023. Please refer to pages 37 through 39 of the earnings presentation for reconciliation of such metrics reportable on a comparable basis.
With that, I’d now like to turn the call over to our Chairman and CEO, Peter Zaffino.
Peter Zaffino, Chairman and CEO, AIG: Good morning, and thank you for joining us today to review our fourth quarter and full year twenty twenty four financial results. Following my remarks, Keith will provide additional perspectives on our financial results, and then we’ll take your questions. Don Bailey and John Hancock will join us for the Q and A portion of the call. Before I begin, on behalf of all of us at AIG, I want to acknowledge the devastating impact of the recent wildfires in California on families, communities and the businesses affected. Our local teams remain on the ground in California, providing critical expertise and support to our customers and partners.
This tragic event serves as a stark reminder of the escalating risks, elevated catastrophe landscape and the complicated evolving environment that we operate in. It also underscores AIG’s purpose to help our customers and clients navigate these challenges with resilience in rebuilding communities and restoring businesses. Let me take a moment to cover what I will walk you through during my remarks this morning. First, I will briefly share highlights from our strong fourth quarter performance. Second, I will discuss our 2024 strategic and operational accomplishments.
Third, I will provide an overview of the full year financial results for AIG and our General Insurance business. Fourth, I will comment on the reinsurance market, including the January 1 renewals and provide some observations on the impact of the recent California wildfires. And lastly, I’ll provide an update on the progress we have made on our capital management strategy, our path to achieving a 10% plus core ROE and how we are positioning the company for 2025. Let’s begin with the fourth quarter results. We recently announced a realignment of our General Insurance business into three segments: North America Commercial, International Commercial and Global Personal.
All of our comments will be aligned to these segments. During the quarter, we continued to deliver exceptional underwriting results and we maintained rigorous expense discipline. General Insurance reported strong net premiums written of $6,100,000,000 an increase of 7% year over year led by 8% growth in Global Commercial lines. Global Commercial generated new business of $1,100,000,000 a 16% increase year over year along with continued strong retention of 86% across the portfolio. Net premiums earned of $6,000,000,000 grew 6% year over year.
Adjusted after tax income per share grew 5% year over year to $1.3 per share. The calendar year combined ratio was 92.5%. And the accident year combined ratio, excluding catastrophes, was 88.6%, which was an outstanding result. 2024 was a terrific year of accomplishments for AIG, during which we not only delivered strong financial performance, but also successfully executed significant strategic and operational initiatives. We delivered disciplined growth in our businesses with a primary focus on risk adjusted returns supported by our underwriting expertise.
We reshaped the portfolio, including divesting a number of non core businesses. Following the sale of Validus Re in November of twenty twenty three, we closed on the sale of the global individual personal travel insurance business in December of twenty twenty four to further position us for the future. While these divestitures helped to further simplify AIG, the biggest accomplishment of the year was the deconsolidation of Corbridge Financial. The separation was a four year journey during which we strategically positioned CoreBridge for its future, while creating a new capital structure for AIG. Some of the major milestones of the CoreBridge journey included establishing a very important partnership with Blackstone (NYSE:BX) through an initial 9.9% sale in 2021, executing the largest U.
S. IPO in 2022, setting up a strategic asset management partnership with BlackRock (NYSE:BLK), divesting non core foreign businesses completing five successful secondary offerings, two of which were in 2024 and culminating in the fourth quarter of AIG’s sale of a 22% stake in Corbridge for $3,800,000,000 to Nippon Life, securing another strategic partner for the company. With the accounting deconsolidation of Corbridge, AIG is now a less complex and more streamlined global business. AIG Next (LON:NXT) was another operational accomplishment in the year, which further supported our journey to make the company leaner, weave the organization together and reduce expenses. We exited 2024 achieving $450,000,000 in run rate savings as part of the program and we expect the remaining benefits to be realized in the first half of twenty twenty five.
We also continue to successfully execute on our capital management strategy in a very disciplined manner with nearly $10,000,000,000 of actions in 2024. AIG reduced shares outstanding by 12% and increased the quarterly dividend per share by 11%, resulting in the return of $8,100,000,000 of capital to shareholders. We received over $4,000,000,000 in dividends from our subsidiaries due to the improved profitability of our operations. We further reduced our debt to total capital ratio to 17% and we ended the year with $7,700,000,000 of parent liquidity. Our capital management actions to date have provided us with tremendous financial flexibility.
Another strategic accomplishment in 2024 was the delivery of AIG’s first generative artificial intelligence large language model powered solution to support business growth. Specifically, we implemented AIG Underwriter Assist, which automates qualitative unstructured data extraction from underlying submissions, internal AIG data sources and external research in minutes to support underwriter review of submissions. To support and advance our Gen AI aspirations, we’ve cultivated an ecosystem of top tier technology partners, including Palantir (NASDAQ:PLTR), Anthropic and AWS in support of an agentic architecture operating model that allows for maximum flexibility. We also launched the Reinsurance Syndicate two thousand four hundred and seventy eight at Lloyd’s through a multi year strategic relationship with Blackstone as part of AIG’s Outwards Reinsurance Program. The syndicate began underwriting on 01/01/2025, and now serves as a key component of AIG’s reinsurance strategy, which I will go over in more detail later.
Turning to the financial results for the full year 2024, adjusted after tax income was $3,300,000,000 or $4.95 per diluted share, an increase of 28% year over year. The improvement was primarily driven by stronger underlying underwriting results, expense reduction benefits from AIG Next, an increase in net investment income and the execution of our balanced capital management strategy. General Insurance delivered terrific financial performance for 2024. For the full year, net premiums written were $23,900,000,000 a 6% increase year over year. Net premiums earned were $23,500,000,000 a 7% increase year over year.
The accident year combined ratio as adjusted was 88.2%, which marked the sixth consecutive year of improvement, largely driven by the GOE ratio. The full year general insurance combined ratio was 91.8%. This was the third consecutive year of a sub 92 combined ratio. Prior year reserve development, net of reinsurance and prior year premium was $289,000,000 a benefit of 1.4 points to the loss ratio. General Insurance full year underwriting income was $1,900,000,000 roughly in line with the prior year despite higher catastrophe losses.
In Global Commercial, net premiums written of $16,800,000,000 increased 7% year over year. North America commercial grew net premiums written by 9% year over year. Lexington grew net premiums written by 14% fueled by robust new business of $1,100,000,000 and a 42% increase in submissions year over year, and that was balanced across all lines. Retail casualty grew net premiums written by 11%, excluding the closeout transaction we mentioned in the third quarter. Our portfolio continues to benefit from a strong rate environment, high retention of our existing portfolio at 93% and we have select opportunities in new business.
International Commercial grew net premiums written by 4% year over year, driven by Energy at 13%, Retail Property at 11% and Talbot at 7%. Global Personal grew net premiums written by 3% year over year, driven by International Personal Auto at 8% and our high net worth business at 6%. I would now like to turn to reinsurance and provide some observations on the market and an update on AIG’s reinsurance renewals at January one of this year. Overall, AIG had a very strong oneone renewal season. Since the reinsurance market’s major reset on 01/01/2023, our consistency in strategy, placement and execution has positioned us very favorably.
Benefiting from an environment of higher retentions and commensurate pricing increases, property reinsurers sought to deploy more capital, but were predominantly focused on upper layers with more remote return periods. Depending on loss activity, limited additional demand led to risk adjusted rate reductions that were consistent with expectations, with the bottom catastrophe layers renewing flat to down 5% and upper catastrophe layers receiving reductions of 10% to 15%. I want to provide some context and observations on the changes in the market as a result of the increase in reinsurance retentions, which I’ve mentioned on previous calls. It’s creating an interesting dynamic for the market in 2025. One insightful statistic from an AON study of over 150 companies over the past ten years is that retentions have risen significantly around the world with The U.
S. Attachment points on average increasing by 280%. As a reminder, in 2024, insured loss from natural catastrophes was approximately $145,000,000,000 the sixth costliest on record and this compares to the average for the last five years of 140,000,000,000 With the increased retentions and increased catastrophe activity, much more of the risk is now being retained by insurance companies. In 2023 and 2024, primary insurance carriers are estimated to retain approximately 90% of the insured loss from natural catastrophes with the reinsurance industry absorbing 10%. Contrast this with the period prior to 2023, reinsurers would often share a significantly higher proportion of the insured loss, with the distribution of losses between insurers and reinsurers at approximately fiftyfifty on average.
Meanwhile, AIG is focused on maintaining lower excess of loss attachment points, including meaningful aggregate coverage to manage frequency of loss tailored to our geographic exposure and to the type of perils that we are exposed. Taking a closer look at wildfires and how the markets changed, the average annual insured loss from 2,000 to 2024 was approximately $4,000,000,000 globally, of which The U. S. Is the majority at $3,500,000,000 Narrow that period to the last ten years and average annual losses from wildfires have roughly doubled to around $8,000,000,000 of which $7,400,000,000 has occurred in The United States. Insured loss estimates for the California wildfires are currently coalescing around $40,000,000,000 with some estimates from credible catastrophe experts reaching as high as $50,000,000,000 The economic loss is estimated to be in excess of $250,000,000,000 producing a protection gap of as much as 80%.
Contrast that to the top 10 largest insured cat events on record, where insurance has typically covered 40% to 50% of the economic loss. As a point of reference, insurance covered approximately 50% of the economic loss from Hurricane Katrina, the largest natural catastrophe event this century. The California wildfires demonstrate the increased loss from secondary perils and the magnitude of tail events that are not captured well in modeling. In a month with one of the lowest model probabilities of loss, the California wildfires alone would make the first quarter of twenty twenty five the second most costly first quarter for natural catastrophes on record. Fifteen years ago, adjusting for inflation, $100,000,000,000 was considered the benchmark for an outsized cat year.
But with the last eight years averaging more than 140,000,000,000 this thinking is clearly outdated. If you assume the upper end of the range for the California wildfires taking a $50,000,000,000 loss pick, adding the average annual insured loss for the past eight years and assuming we have an active but not abnormal wind season, which is realistic given the twenty twenty four hurricane season experience and ocean temperatures are the warmest on record, 2025 could be a year of more than $200,000,000,000 of insured catastrophe losses. This could recalibrate the entire industry. AIG reduced our overall California exposure beginning in 2022. This decision coupled with our 2025 reinsurance structure has effectively reduced our exposure such that the expected loss to AIG from the recent wildfires is approximately $500,000,000 before reinstatement premiums and barring any unforeseen additional developments.
Turning specifically to AIG’s reinsurance outcomes at oneone, we successfully maintained our prior objectives, our reinsurance purchasing strategy to preserve and optimize capital and enhance the quality of earnings through active management of the volatility of our underwriting results. Starting with our property catastrophe placements, our core commercial North America retention of 500,000,000 remains unchanged in nominal terms for the third consecutive year despite growth in the underlying portfolio. We also expanded coverage and maintained our core international occurrence attachments and renewed our dedicated occurrence tower for our high net worth business, which attaches at $200,000,000 We improved our $500,000,000 of aggregate protection by reducing the annual aggregate deductible for North America, creating a specific non peak section and expanding the coverage for the high net worth portfolio. Overall, for North America, depending on loss distribution, AIG’s modeled net first loss exposure, including the impact of reinstatement premiums, is comparable to 2024 and our second and third event exposure is materially lower following its renewal cycle. For all of our major proportional treaties, we were able to improve or maintain our ceding commission levels, a strong recognition of our underwriting expertise, and our position as a market leader across multiple classes.
We were also able to establish two new proportional treaties to support the high net worth portfolio. Our strategy to establish Private Client Select as a standalone MGU and introduce capacity to support growth in the platform beyond AIG’s balance sheet has been validated with the addition of five of the leading underwriting companies in the world to the platform, taking 30% of our homeowners and auto portfolios through quota share reinsurance. Casualty remains an area of caution for many reinsurers with appetite generally diminished. They are highly selective of the insurance companies they support. And overall, the casualty renewals were more orderly for the companies that have strong underwriting portfolios.
We were pleased with the successful renewal of our core casualty treaties at favorable terms. This renewal cycle again signals the strong external industry recognition that AIG continues to be a leader in the casualty market. We remain optimistic on the outlook for our casualty portfolio and see considerable opportunities ahead, while being cautious and very focused on maintaining our high underwriting standards. Also of significance for AIG at oneone was our launch of a new dedicated reinsurance syndicate at Lloyd’s supported by funds managed by Blackstone. This pioneering structure announced in December 2024 is an example of how insurance risk can be directly connected to sophisticated investors to generate attractive returns for both parties.
The syndicate provides AIG with a long term meaningful reinsurance partner and an additional source of fee income. Blackstone has access to a high quality, well diversified underwriting portfolio with the ability to generate attractive returns by taking a sizable participation in the majority of AIG’s outward reinsurance treaties at market terms. We’re pleased to partner with a leading global asset manager on this innovative structure. Our reinsurance strategy has played a pivotal role in our journey to establish AIG as an industry leading global P and C underwriter. We’re grateful for the long term support and partnership of the industry’s leading reinsurers, which has helped position us where we are today.
Turning to capital management, we continue to execute very well on our balance and discipline strategy. We made major progress in 2024 and in many ways exceeded expectations. As we outlined last year, our guidance was to repurchase $10,000,000,000 of shares in 2024 and in 2025. The current guidance is expected to bring us within our target share count range of $550,000,000 to 600,000,000 shares. We have $3,400,000,000 of the $10,000,000,000 guidance that I provided remaining for 2025.
We will likely exceed this guidance and we have over $5,600,000,000 remaining on our current share repurchase authorization. We expect to return to more normalized levels of share repurchases as we enter 2026, assuming we have no further sell downs of CoreBridge or other additional sources of liquidity. We ended the year with a very strong parent liquidity of $7,700,000,000 Additionally, we do not anticipate taking any actions that would significantly affect leverage in 2025. We are committed to reviewing our dividend annually and anticipate that we will increase our dividend in 2025 in line with the decrease in our share count over the past year, subject to AIG Board approval. Going forward, our key focus is on profitable growth and allocating capital to the best opportunities for the most attractive risk adjusted returns.
Our very early forecast indicates we’re off to a strong start for 2025 and barring any unforeseen developments, we expect to achieve meaningful organic growth driven by our global commercial business and the benefits of our restructured reinsurance program. As a result of our disciplined capital management combined with our sustained underwriting excellence and continued focus on expense management, we’re well on track to deliver a 10% plus core operating ROE for the full year 2025. We have several ways in which we can deliver on this commitment. These are maintaining our strong underwriting results with a focus on improving Global Personal improving our investment income yields, executing on a simpler, leaner business model across AIG and continued balanced capital management. In summary, I’m very pleased with our outstanding fourth quarter and full year 2024 performance.
2025 is a new chapter for AIG and we’re moving forward with strong momentum. We continue to differentiate ourselves with deep industry expertise and disciplined focus on underwriting excellence and outstanding operations and claims capabilities, which drive exceptional value for our clients, partners and stakeholders. With that, I will turn the call over to Keith.
Keith Walsh, Chief Financial Officer, AIG: Thank you, Peter. This morning, I will provide details on fourth quarter results for General Insurance, net investment income and other operations, as well as key balance sheet items. I would like to begin by addressing a few changes in our financial reporting. As Peter mentioned, we have realigned our General Insurance business into three reporting segments North America Commercial, International Commercial and Global Personal. Global Personal lines have been consolidated into a single reporting segment.
This brings together our Global Accident and Health, Personal Home and Auto, Global Warranty and Services and High Net Worth businesses. Along with our new reporting segments, we have updated the product line net premiums written disclosure on Page eight of our financial supplement to give more transparency into the underlying trends in our businesses. The three segments and updated product line disclosure are reflected retrospectively in AIG’s twenty twenty four fourth quarter and full year financial results. Additionally, we have streamlined other operations to include activities only related to having a global regulated parent company and now exclude the results of runoff businesses from adjusted pre tax income. We believe these changes enhance the clarity of our financial disclosures and provide a better representation and alignment of our core business.
Historical results have been recast to reflect these changes with de minimis impact to operating EPS. Other operations now largely consists of net investment income from our parent liquidity portfolio, core bridge dividend income, corporate general operating expenses and interest expense. Turning to our fourth quarter general insurance results. Adjusted pretax income or APTI was $1,200,000,000 In North America Commercial, net premiums written increased 9% year over year driven by strong new business, which grew 17% with retention of 85%. International commercial net premiums written increased 7% year over year with new business growth of 15% and excellent retention of 88%.
In Global Personal, net premiums written increased 1% on a constant currency basis. The sale of the Global Personal travel and assistance business, which closed in early December, was about a four point headwind to the year over year comparison. Adjusting for that, growth was 5% in the quarter on a comparable basis, driven by 16% growth in our global high net worth business. The sale of the Global Personal Travel business will have an impact on the Global Personal segment in 2025. For full year 2024, this segment had $7,100,000,000 of net premiums written.
When modeling 2025, the sale of the Global Travel business will remove approximately $720,000,000 of net premiums written. This is a roughly 10 percentage point growth impact for the segment. General Insurance underwriting income for the quarter was $454,000,000 a $156,000,000 decrease from the prior year quarter, driven entirely by higher catastrophe losses. General Insurance calendar year combined ratio was 92.5. The accident year combined ratio as adjusted was 88.6%, a 30 basis point increase from the prior year quarter.
This was driven by a slight increase in the accident year loss ratio, while the expense ratio remained flat despite absorbing more AIG parent expenses. Catastrophe losses were $325,000,000 or 5.5 points on the loss ratio. This includes $224,000,000 of losses from Hurricane Milton and an adjustment for prior quarter’s events, largely from Hurricane Helene, which occurred on the final day of the third quarter. Turning to reserves and our detailed valuation reviews or DVRs. This quarter, General Insurance had $102,000,000 of favorable prior year development, including $34,000,000 from the ADC amortization, $16,000,000 from our fourth quarter DVRs and $52,000,000 from non DVR adjustments, predominantly recognition of AVE on U.
S. Short tail lines. The fourth quarter’s DVRs covered the remaining 10% or approximately $4,000,000,000 of our total loss reserves, focusing on the remaining portion of U. S. Financial lines, global personal lines, Canada and Glatfelter (NYSE:MAGN).
The favorable prior year development was primarily driven by Canada Casualty and U. S. E and O. We conduct a comprehensive DVR annually for each product line across our $40,000,000,000 of reserves. While DVRs are spread across quarters, we have a robust year round process on our entire book in addition to our quarterly DVRs.
Going forward, our comments will focus less on reporting the DVR outcomes and more on our overall reserve analysis, which reflects AVE, claims diagnostics and rate monitoring across all lines and geographies. One additional item I would like to discuss is a provisional reserve we created in 2022 in response to the potential uncertainty with inflation and other variables in the post pandemic macro environment. This provision, which is included in IBNR, has been carried in the lines that we viewed as most susceptible to rising inflation with a large portion booked in our workers’ compensation reserves. This year, we undertook a thorough review of the uncertainty provision, which was set above the loss picks from our actuarial reviews and refined our analysis, including its allocation among our lines of business. The uncertainty provision did not reflect any emergence and we have maintained the overall estimate.
However, we have decided to reduce the provision in excess workers’ comp and reapportion approximately $150,000,000 of the provision within excess casualty. We elected to move this portion of the reserve to excess casualty as the development factors and the length of the tail can drive a wider range of outcomes on our reserves. To be clear, our traditional reserve methods are not indicating any emergence in excess casualty, but we felt given the nature of the provision, it was more appropriate to be situated within this line. As a reminder, our reserving philosophy is to react to bad news quickly and wait to recognize good news over time as we monitor developments. Moving on to rates and pricing.
Fourth quarter global commercial lines pricing, which includes rate and exposure, increased 5% year over year, excluding workers’ compensation and financial lines. In North America commercial, renewal rate increased 3% year over year or 7% if you exclude workers’ compensation and financial lines. Exposures increased 2% year over year with an all in pricing change above loss cost trend. Property market conditions were under pressure in the fourth quarter due to increased competition across both the admitted and E and S markets, while the underwriting margin remained healthy, supported by the cumulative rate increases over the past several years and our disciplined approach. In North America casualty lines, rate continued to outpace loss cost trend with increases in the mid teens in wholesale and excess casualty.
In North America Financial lines, we continue to experience headwinds, but see indications that rate reductions are moderating. In International Commercial, overall pricing was flat or up 2% excluding financial lines. While rate is below trend, we feel good about our book given we’ve had over 60% cumulative risk adjusted rate since 2018. Our well diversified portfolio allows us to navigate different market conditions effectively, prioritizing lines of business that offer the most compelling risk adjusted returns while upholding our underwriting standards. For the full year 2024, excluding workers’ compensation and financial lines, global commercial lines pricing, which includes rate and exposure, increased 6% with 8% in North America and 4% in International.
Turning to other operations, fourth quarter adjusted pretax loss was $150,000,000 which improved 34% year over year. This was primarily driven by lower GOE reflecting AIG next benefits as well as incremental movement of GOE into general insurance. We continue to realize the benefits of AIGnext and push non public company related expenses into the business. We expect corporate GOE expenses to migrate towards approximately a 90,000,000 per quarter run rate over the course of 2025. Interest expense improved $10,000,000 year over year as a result of our liability management, which reduced total debt by $1,600,000,000 in 2024.
One other item I want to discuss is a runoff business Blackboard. In the fourth quarter, we increased the prior accident year reserves for Blackboard by $112,000,000 to reflect loss activity that has been well above what was expected. Turning now to investment income. For the full year 2024, net investment income on an APTI basis was $3,500,000,000 up 13% from 2023, primarily driven by core bridge dividends, an increase in short term investment income and higher reinvestment rates on fixed maturities. Fourth quarter net investment income on an APTI basis was $872,000,000 largely unchanged year over year.
General Insurance net investment income was $779,000,000 including income on fixed maturities, loans and short term investments of $720,000,000 and alternative investment income of $72,000,000 Other Operations net investment income was $93,000,000 consisting of income from our parent liquidity portfolio of $64,000,000 and core bridge dividend income of $29,000,000 During the fourth quarter, we continued to benefit from higher reinvestment rates on the fixed maturity and loan portfolio. The average new money yield of 5.38% was roughly 175 basis points higher than the sales and maturities in the quarter. The annualized yield on the fixed maturity and loan portfolio, excluding calls and prepayments, was 3.92%, up four basis points year over year or three basis points sequentially. Fourth quarter alternative investment income was $67,000,000 dollars an increase of $26,000,000 year over year driven by improved private equity performance partially offset by lower hedge fund income owing to our strategy to reduce exposure. Private equity yielded 6.42% for the quarter below our long term expected return of 7.5%.
The makeup of our private equity portfolio is a little over 25% real estate and with the current macro environment, we expect pressure from this portion of the portfolio to continue through 2025. Turning to tax, the adjusted effective tax rate for the fourth quarter and full year was 24.6%. For 2025, we expect the adjusted tax rate to be in line with 2024, but may vary based on the geographic mix of income. We finished 2024 with a very strong balance sheet. Book value per share was $70.16 at year end, up 8% from 12/31/2023, mainly due to the favorable impact of lower interest rates on AOCI and reduced shares outstanding.
Adjusted book value per share was $73.79 down 6% from year end 2023, primarily due to the impact of Corbridge deconsolidation. Core operating ROE was 9.1% in the quarter and for the full year. As Peter laid out, we are committed to achieving our target of a 10% plus core operating ROE for the full year 2025. As Peter mentioned, we had a substantial $6,600,000,000 return to shareholders in 2024 through share repurchases and are well on our way to completing our guidance of $10,000,000,000 of repurchases in 2024 and 2025. Through February 7, we have repurchased $952,000,000 of shares year to date in 2025.
We are proud of the significant progress we have made in 2024 and the ability to deliver outstanding core operating results, while successfully executing significant transformation initiatives. With that, I will turn the call back over to Peter.
Peter Zaffino, Chairman and CEO, AIG: Thank you, Keith. And Michelle, we’re ready for questions.
Michelle, Conference Call Operator: Thank you. Our first question comes from Alex Scott with Barclays (LON:BARC). Your line is open.
Alex Scott, Analyst, Barclays: First one I had for you, excuse me, is on the core ROE that you gave. I just wanted to confirm that that’s including the wildfire impact and it looks like it’s running a bit better than I would have expected based on the combined ratios that you talked about in the past and corporate expenses and so forth. So I was just interested if you define it all on maybe some of the things that you’re running ahead on or that are improving relative to some of those comments you’ve made in the past? Thanks.
Peter Zaffino, Chairman and CEO, AIG: Yes, certainly Alex. And yes, we are confirming the 10% plus ROE including the $500,000,000 wildfire that we had in January. If I could spend a second, I think we’ve done an exceptional job over the past few years of structuring our sort of global portfolio, structuring the reinsurance to supplement that and having net retentions well within our expectations and what we budget. If I look at what we do budget for AAL over the last couple of years relative to our overall experience, it’s been exactly where we anticipated even with elevated activity. So this is no different.
I mentioned on the call that we’re going to take first event losses around the same with reinsurance that we did in 2024, but second and third events will be less. And so that’s how we structured it and we are confirming guidance on the 10% including what happened in January. I think Keith noted that we have a lot of different ways in which we can sort of drive improvement in terms of earnings. I did as well in my prepared remarks. We’re really pleased with the commercial portfolio and how it’s performed on a combined ratio basis.
We just continue to I think elevate our overall performance. I have singled out personal because I think that combined ratio is not where any of us want to be. We consolidated that under one leader, John Hancock. He’s shown exceptional leadership in what he’s done with the commercial portfolio in international. And I think it’s going to give us a much better line of sight on the overall portfolio in terms of how we can improve it, which we fully expect to do.
I think there’s opportunities in NII further capital management and I think we reconfirmed what we’re doing on return of capital to shareholders. So I think we have a lot of very positive momentum and want to confirm guidance. Do you have a follow-up, Alex?
Alex Scott, Analyst, Barclays: Yes. So as a follow-up, I’d just be interested in some of the areas you’re targeting for organic growth. And And maybe in particular, your updated view on price adequacy, just given some of the declines in property pricing in E and S and then maybe also on Casualty.
Peter Zaffino, Chairman and CEO, AIG: Okay. I’m going to have John Hancock and Don Bailey talk a little about the growth because they’ve done an exceptional job in terms of outlining where our portfolio can grow, focusing on risk adjusted returns. What I would say, and this is complementing their efforts is that we’ve just done a tremendous job in terms of client retention focusing on an underwriting culture of maintaining and improving profitability. And so like we deploy capital where we think we have the best opportunities for improved risk adjusted returns. And they’ve done an exceptional job on new business and targeting parts of our business where we think we can have those outsized returns over time.
And I think that’s how you’ve seen the portfolio shape. So John, why don’t I start with you in terms of international and maybe give us a little bit of insight in terms of the growth?
John Hancock, International Commercial Leader, AIG: Yes. Okay. Thanks, Peter and Alex. Growth through retention and new business was strong in the quarter. Peter and Keith called out a lot of that in their opening remarks, so I won’t repeat it now.
But what I will say is we’re working from such a strong base in this commercial portfolio in international. And when we look at where we’ve been growing, if you look at the quarter, there’s a lot of seasonality across international. For example, in Q4, ’50 percent more than 50% of our net premiums come from just two lines. We like them Global Specialty and Financial lines, but that’s not the full year mix. So I think looking at growth, looking at new business on quarter on quarter isn’t always the most insightful way.
And Q4 is obviously the end of the year as well. So I think it’s a good time to reflect on what we’ve been doing the whole of 2024 and talk about that momentum that we have been building. If I look at the full year, Keith called it out, 4% growth in the year across International Commercial. Renewal retention in the full year, 89%. I’m really, really pleased with that on such a good book of business.
And new business for the year, more than $2,000,000,000 of new business during the year in International Commercial. Again, a great outcome, really reflective of the fact that we’re still seeing great new business opportunities all around the world actually. And I also do want to make clear that new business is a big driver of our growth. We manage the quality, the price advocacy of our new business just as closely as we do our renewal book. And we trade on the value.
We offer our recognition as market leader, first class claims, risk management, strong balance sheet, not just price. And that matters to a lot of customers. And if I could, I know you asked about property specifically. If I can just call out two places where we’ve been working really hard with our distribution partners on being clear on risk appetite, building propositions that customer want, building strong opportunity pipelines. That’s where we’ve been getting the growth momentum from and that’s what we will see all through this year.
There’s too many areas to call out across international. But Global Specialty, yes, number of new business submissions up 24% year on year. Marine absolutely outstanding at 46% increase. Our strike rate on the business, we quote more than 25%. And again, Marine Energy, which Peter talked about earlier, 40% strike rates.
So that’s more than $700,000,000 of new business in Global Specialty. And just a final one to show that momentum, our commercial property book, another standout. We spent a lot of time fixing and repositioning that portfolio. And we’ve now seen over the last couple of years really strong growth in profit. Growth of 11% in the year.
We’re still seeing strong mid digit rate rises as well as exposure growth and some real high quality new business. The rating environment today, as Peter said earlier, is different to what it was in Q4. So we see lots of great opportunity all over and we’ll build on that momentum.
Peter Zaffino, Chairman and CEO, AIG: That’s great, John. Thank you. Don, maybe I just want to have a little bit of a highlight of achievements in North America in terms of growth.
Don Bailey, North American Commercial Leader, AIG: Great. Thank you, Peter. I’ll break down the North American commercial numbers. For 2024, and you mentioned this, we grew net premiums by 9% driven by retention and our new business.
Michael Zaremski, Analyst, BMO: We
Don Bailey, North American Commercial Leader, AIG: had strong retention of 91% in retail and 76% in wholesale. We also delivered impressive new business growth like John in North America, 15 Percent up on a year over year basis and that’s on top of 14% new business growth in 2023. This growth is intentional, it’s strategic, it’s diversified. With the great work of the past few years in our portfolio, we came into 2024 with distribution engagement as a top priority for us in all the channels in which we operate and it’s paid off. Our new business was strong through all three channels retail, wholesale and alternative.
With Lexington, we had another strong year. They represented 48% of our new business. Lex Property, Casualty, Western World, all delivered. And as Peter referenced, Lex saw another big increase in submissions, 42% increase on a year over year basis. And there’s a clear opportunity to harness the strong submission activity there to drive growth as we go forward.
The rest of the new business was balanced across the portfolio. And finally, Peter, I’ll just say this at the end that our growth given our unique assets at AIG, we really are able to underwrite with great discipline within our risk appetites and target opportunities with attractive risk adjusted returns. Thanks, Peter.
Peter Zaffino, Chairman and CEO, AIG: That’s great, Don. John, thank you. I know that answer was they were very thorough, but they’re doing the work and so I thought it’d be really helpful to hear from them. Next question.
Michelle, Conference Call Operator: Thank you. Our next question comes from Meyer Shields with KBW. Your line is open.
Meyer Shields, Analyst, KBW: Great. Thanks. Peter, I was hoping you could walk us through how we should think about the impact of the artificial intelligence deployed in underwriting. I know it’s simplistic to say how many loss ratio points would have moved, but how should we think about it more broadly?
Peter Zaffino, Chairman and CEO, AIG: Thanks, Maher, and good morning. For us, I could spend a meaningful amount of time talking about GenAI and we fully intend to do that at Investor Day. Our focus has always been on driving growth. Certainly, there’s opportunities in contact centers and call centers and operational capabilities that through large language models, robotics that we will gain efficiencies. But for us, it’s all about ingestion of data, getting more qualified data to the underwriters in a fraction of the time.
And in order to do that, you need to be very disciplined sort of end to end. So how we ingest data from brokers and agents, how we define what data we want in the underwriting criteria when it gets to the underwriter, how do we load that into models, and how do we get more data from credible sources that may supplement the underwriters decision making in order to continue to improve the portfolio. If I use Lexington as an example, in 2017 and 2018, we received 40,000 submissions. This year, it’s over 400,000. So it’s more complex today than just building out algorithms to get to different industry groups or different classes of business.
We want to get more to the underwriters real time. And so we’ve been doing this for the better part of eighteen months. I said we built out a really strong AgenTek ecosystem with again data ingestion with Palantir, building out large language models with Anthropic and using other reliable third parties to help us accelerate the modeling. And so I think it’s going to help us propel top line growth by getting more data, getting richer datasets, given the underwriters more capabilities to underwrite and having it done in the fraction amount of time and doing it at scale.
Meyer Shields, Analyst, KBW: Okay. Thank you. That’s very helpful. The second question is on the timeline for getting the high net worth personal lines business to growth underwriting profitability. I don’t know if there’s anything you can share on that.
Peter Zaffino, Chairman and CEO, AIG: Yes, absolutely, Maher. And look, I think we’ve been on that journey for a couple of years and everybody has been patient with the story. We continue to improve the combined ratio. We continue to improve the loss ratio. And if you look at Global Personal, the biggest contributor in terms of that improvement, it was primarily all the private client service or high network business.
There was a significant improvement in the loss ratio and we expect that to continue. We have a balanced growth strategy with non admitted as well as admitted and believe that as we see more submission activity, which we are a non admitted that we’re able to deploy our capital with more flexibility to be responsive to client needs. So I’m thinking about structure, pricing, the amount of limit that we can put out and it’s not only in peak zones, it’s in non peak zones. And so we expect to see that continue to accelerate. We got to scale this year and so we’ve renegotiated seating commissions with PCS.
And so you’ll see a meaningful improvement there, which should translate into overall expense ratio improvement and combined ratio improvement. And last I mentioned is that we have tremendous partners that have joined us based on how we’ve repositioned the portfolio and are encouraging growth. And so we have a 30% quota share with six participants all have very strong expertise in the high net worth space that are backing us for more growth. So I think we have it all moving in the right direction, attritional loss ratios, CAT support from great partners and improvement in expense ratio and you’ll see that contribute in 2025 to helping overall global personal improve.
Meyer Shields, Analyst, KBW: Okay, fantastic. Thank you so much.
Michelle, Conference Call Operator: Thank you. Our next question comes from John Newsome with Piper Sandler. Your line is open.
John Newsome, Analyst, Piper Sandler: Good morning. Congrats on the quarter. Thank you, John. Two sort of big picture questions. One is, are we at a point where there are aspirational areas of business that AIG is not in that you would be looking for either on organic or integrating basis?
And I guess sort of relatedly, on the other side of that question is, where are we from divesting of non core businesses perspective? Are we pretty much done at this point?
Peter Zaffino, Chairman and CEO, AIG: Sure. Thanks for the question. I’ll start with the second one first. I think we are largely done. I mean, I don’t ever say never or always, but I think we now have the portfolio in a place where we’d like it certainly on the commercial side and now having one segment for global personal.
We know we have work to do, but really like the mix of the portfolio, its global balance and think that we can grow it. In terms of M and A, we’re going to remain very disciplined. I always use the word when I get the question on the calls or I’m in front of you, it’s around being it has to be compelling, which just means that it’s either going to be a geography that’s complementary that actually adds value to AIG and our clients, products that we may not be in that we’d like and think that it’s going to be accretive to ROE and how we grow our business. There are businesses that we have that have scale, but additional scale could be quite compelling. And so we are looking at that businesses that may do that and accelerate.
And of course, then there’s complementary businesses that we may not be in that we think could be very additive to the platform. So, we have a very disciplined approach. We always are looking around the world to see if there’s things that are additive. But I do want to say, I think we’re at the size and scale where we don’t need to add anything. We are showing and I think John and Don provided tremendous insight as to why we think we can grow the business organically.
We have a really strong capital base, which we can grow into and believe that there’s a path there. So I don’t think it’s an either or. I think we have now set the company up with enormous strategic and financial flexibility. We’ll remain very disciplined as we look at inorganic, but we’re very excited about the organic opportunities that are in front of us.
John Newsome, Analyst, Piper Sandler: Great. Maybe as a second question, do you have any thoughts on the regulatory environment? Clearly, lots of, as my grandmother would say, interesting things happening in California from a regulatory perspective. But broader, do you think there’s some changes here that are coming or do you think it’s pretty status quo?
Peter Zaffino, Chairman and CEO, AIG: Insurance is complicated because we’re regulated state by state and that makes every state a little bit different, right? And I think the ones that get the attention are going to be ones that have peak zone exposure like we’re seeing within California. And California is particularly complicated because I relate it almost to Japan. It’s a geography that has two major perils that drive catastrophe results. And so, like I was in Japan’s typhoon quake, California’s quake and now wildfire.
And but there’s regulators, we work very closely with them to try and be helpful and constructive on the changes that have happened in the catastrophe climate, which is looking at modeling, looking at loss costs, looking at cost of goods sold and looking at ways in which we can be more responsive to client needs. And I think that in California, we just saw that the modeling is flawed. It doesn’t necessarily always take into account tail events. There’s not a lot of model losses north of $40,000,000,000 and so therefore it becomes very complicated. And I don’t mean this in California, but we’re now seeing it, which is some of these state set up sort of vehicles that become a market of last resort, sometimes become a market of only resort and then they end up taking on a lot of aggregate.
So I think we just need a reset in certain spots. And I think like insurance companies that have technical capabilities working very closely with regulators, I hope that we’re going to position the businesses where we will have more flexibility in the future.
John Newsome, Analyst, Piper Sandler: Thank you very much.
Peter Zaffino, Chairman and CEO, AIG: Yes. Thank you.
Michelle, Conference Call Operator: Thank you. Our next question comes from Michael Zaremski with BMO. Your line is open.
Michael Zaremski, Analyst, BMO: Hey, great. Follow-up morning on the expense ratio. I heard the comments about ceding commissions improving, so that should be a positive going forward. The expense ratio has been running a bit higher than expected for a while now. I mean, obviously, the loss ratio has been excellent.
So that’s the main focus. But just curious if you’re willing to give any specific more specific guidance on kind of what type of expense ratio level or acquisitions expense ratio level we should be thinking about on a go forward basis?
Peter Zaffino, Chairman and CEO, AIG: Michael, are we talking about PCS and high net worth or just general insurance?
Michael Zaremski, Analyst, BMO: Sorry, I was talking about the whole company, general insurance.
Peter Zaffino, Chairman and CEO, AIG: Yes. So let me unpack. I mean, again, I know with AIG, it’s like the divestitures and a lot of the moving pieces from other operations into general insurance, it’s complicated. But I’m actually really pleased with what we’ve done on the expenses. I think we’ve remained incredibly disciplined.
We focused on a lean parent, which just meant that there’s simplicity, there’s not a lot of expenses sitting in other operations and they’re going to be more on the business. So if I actually take you through what happened, if you look at our financial supplement, you’ll see $2,900,000,000 or thereabouts 2,952 as sort of the expenses. But if you get underneath that, look AIG Next, the business was very proactive in getting expenses out. And so we would have gotten around $125,000,000 to $140,000,000 out through AIGnext, but we’ve added in from other operations and other technology that would have sat in other operations almost $200,000,000 And so the business has absorbed a lot of expenses as we reposition the company to have this lean parent, very transparent, not with a lot of expenses and the business is absorbing it as we go. And so not only am I proud that they’ve been able to do that and we haven’t had a blip, we also believe that there’s opportunities to get more expenses out and the ratios to improve as we get through the rest of 2025.
Michael Zaremski, Analyst, BMO: Okay. Do you have
Alex Scott, Analyst, Barclays: a follow-up?
Michael Zaremski, Analyst, BMO: Yes. Quick follow-up. Just I know you made some comments on the casualty marketplace. I’m not fast enough to update all the pricing data you gave us, which is always helpful. But I’m curious, are you experiencing any acceleration in casualty pricing, either excess or retail?
And do you still feel that I feel like a couple of quarters ago, you mentioned this might be an area you’re willing to play a bit of offense in?
Peter Zaffino, Chairman and CEO, AIG: Yes. So it’s a great question. And again, when we look at rate across North America, international, it’s an index and so you don’t always get line of sight. But we do see real opportunities in casualty. We’re very cautious, but the rate environment is actually quite strong.
I mean in Lexington Casualty, you’ll start there. We had 14% rate in 2024 and retail excess casualty, we had 15%. That’s the fifth year in a row of double digit rate increases in retail excess casualty. It’s above loss cost trend. So we feel like we’re building margin, really strong retention.
We’ve been able to reposition the portfolio as we’ve liked. We have an exceptional particularly in The U. S. Leadership with Barbara Luck. I mean, we have the best underwriting team in the industry.
And that’s being demonstrated as clients are asking us to be on their business, help structure it, help with the terms and conditions, so others will be active participants in the market. And so we’re leading, we’re underwriting really well. We’ve repositioned the portfolio. We’ve got great reinsurance support for severity and we’re getting rate above loss costs. So I want to be very cautious and careful, but I also don’t want to miss the opportunity to be an industry leader.
Michael Zaremski, Analyst, BMO: Thank you.
Peter Zaffino, Chairman and CEO, AIG: Okay. I want to thank everybody for questions and your active participation today. In closing, I want to thank our AIG colleagues around the world for their continued commitment, teamwork and the significant contributions. I mean, we accomplish a lot every year and we try to capture it for you today. And we really appreciate you joining us today and we look forward to sharing a lot more detail on March 31 during AIG’s Investor Day.
Have a great day.
Michelle, Conference Call Operator: Thank you for your participation. This does conclude the program and you may now disconnect. Everyone have a great day.
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