Peter Zaffino
Chairman & Chief Executive Officer at American International Group
Good morning, and thank you for joining us today to review our fourth quarter and full-year 2024 financial results. Following my remarks, Keith will provide additional perspectives on our financial results and then we'll take your questions. Don Bailey and Jon Hancock will join us for the Q&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 maintain rigorous expense discipline General Insurance reported strong net premiums written of $6.1 billion, an increase of 7% year-over-year, led by 8% growth in global commercial lines. Global Commercial generated new business of $1.1 billion, a 16% increase year-over-year, along with continued strong retention of 86% across the portfolio.
Net premiums earned of $6 billion grew 6% year-over-year. Adjusted after-tax income per share grew 5% year-over-year to $1.30 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 deliver 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 2023, we closed on the sale of the global individual personal travel insurance business in December of 2024 to further position us for the future. While these divestitures help to further simplify AIG, the biggest accomplishment of the year was the deconsolidation of Core Bridge Financial. The separation was a four-year journey during which we strategically positioned Core Bridge for its future while creating a new capital structure for AIG.
Some of the major milestones of the Core Bridge journey included establishing a very important partnership with Blackstone through an initial 9.9% sale-in 2021, executing the largest US IPO in 2022, setting up a strategic asset management partnership with BlackRock, divesting non-core foreign businesses, completing five successful secondary offerings, two of which were in 2024 and culminating in the fourth quarter with AIG's sale of a 22% stake in Core Bridge for $3.8 billion to Nippon Life, securing another strategic partner for the company. With the accounting deconsolidation of Core Bridge, AIG is now a less complex and more streamlined global business.
AIG Next 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 million in run-rate savings as part of the program and we expect the remaining benefits to be realized in the first-half of 2025.
We also continue to successfully execute on our capital management strategy in a very disciplined manner with nearly $10 billion of actions in 2024. AIG reduced shares outstanding by 12% and increased the quarterly dividend per share by 11%, resulting in the return of $8.1 billion of capital to shareholders.
First, we received over $4 billion 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 $7.7 billion 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.
First, to support and advance our Gen AI aspirations, we've cultivated an ecosystem of top-tier technology partners, including Palantir, Anthropic and AWS in support of an agentic architecture operating model that allows for maximum flexibility.
We also launched the reinsurance Syndicate 24/78 at Lloyd's through a multi-year strategic relationship with Blackstone as part of AIG's outwards reinsurance program. The syndicate began underwriting on January 1, 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 $3.3 billion 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 $23.9 billion, a 6% increase year-over-year. Net premiums earned were $23.5 billion, 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 million, a benefit of 1.4 points to the loss ratio. General Insurance full-year underwriting income was $1.9 billion, roughly in-line with the prior year despite higher catastrophe losses.
In Global commercial, net premiums written of $16.8 billion 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 $1.1 billion 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 1 of this year. Overall, AIG had a very strong 1/1 renewal season.
Since the reinsurance market's major reset on January 1, 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%.
First, 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, is creating an interesting dynamic for the market in 2025. One insightful statistic from an AEON study of over 150 companies over the past 10 years is that retentions have risen significantly around the world with US attachment points on average increasing by 280%.
As a reminder, in 2024, insured loss from natural catastrophes was approximately $145 billion, the sixth costliest on record, and this compares to the average for the last five years of $140 billion. 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 50-50 on average. Meanwhile, AIG is focused on maintaining lower excess to 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 2000 to 2024 was approximately $4 billion globally, of which the US is the majority at $3.5 billion. Narrow that period to the last 10 years and average annual losses from wildfires have roughly doubled to around $8 billion, of which $7.4 billion has occurred in the United States.
Insured loss estimates for the California wildfires are currently coalescing around $40 billion with some estimates from credible catastrophe experts reaching as high as $50 billion. The economic loss is estimated to be in excess of $250 billion, 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 2025, the second most costly first-quarter for natural catastrophes on record. 15 years ago, adjusting for inflation, $100 billion was considered the benchmark for an outsized cat year. But with the last eight years averaging more than $140 billion, this thinking is clearly outdated.
If you assume the upper-end of the range for the California wildfires, taking a $50 billion 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 2024 hurricane season experience and ocean temperatures are the warmest on record, 2025 could be a year of more than $200 billion 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 million before reinstatement premiums and barring any unforeseen additional developments.
Turning specifically to AIG's reinsurance outcomes at 1/1, 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 million 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 million. We improved our $500 million 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 this 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 1/1 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. First, 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&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 balanced and disciplined strategy. We made major progress in 2024 and in many ways exceeded expectations. As we outlined last year, our guidance was to repurchase $10 billion of shares in 2024 and in 2025. The current guidance is expected to bring us within our target share count range of 550 million to 600 million shares.
We have $3.4 billion of the $10 billion guidance that I provided remaining for 2025. We will likely exceed this guidance and we have over $5.6 billion 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 Core Bridge or other additional sources of liquidity.
We ended the year with a very strong parent liquidity of $7.7 billion. 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.
