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, our financial supplement and earnings presentation, all of which are available on our website at aig.com. Finally, today's remarks related to net premiums written growth are presented on a constant dollar basis.
Please refer to page 26 of the earnings presentation for reconciliations of such metrics. With that, I'd now like to turn the call over to our President and CEO, Eric Andersen.
Good morning, everyone. Thank you for joining us today. I'm pleased to share our strong second quarter results and the meaningful progress we are making across AIG. Our team is executing well on delivering the financial commitments we outlined at our 2025 Investor Day, which we remain on track to achieve. On the call today, I will review our second quarter financial highlights, provide perspective on the current market environment, and discuss our strategic priorities that will guide our continued progress and growth. Following my remarks, Keith Walsh will provide more detail on our financial performance, and Jon Hancock will join us for Q&A. Now let me review a few financial highlights. In a dynamic environment, we delivered another strong quarter, which contributed to an exceptional first half of the year.
Our performance reflects the benefits of our diversified portfolio, continued momentum from organic growth in our strategic transactions, and disciplined execution by our talented team. Adjusted after-tax income per diluted share was $2, a 10% increase year-over-year, and adjusted after-tax income was $1.1 billion. Core operating ROE was 11.1% in the second quarter and 11.6% for the first half of 2026. Underwriting income was $686 million, a 10% increase year-over-year. The accident year combined ratio, as adjusted, was 88.1%, an improvement of 30 basis points from the prior year quarter. The calendar year combined ratio was 89%, also an improvement of 30 basis points over the prior year quarter. Net premiums written increased 9%, or 11% excluding North American property, reflecting organic growth in select high-performing segments of our global commercial portfolio.
Growth in global personal, driven by our Accident & Health and high net worth businesses, and contributions from our recent strategic transactions, which are providing meaningful growth in line with our expectations. Global commercial insurance net premiums written increased 9% year-over-year. North America Commercial net premiums written increased 9% year-over-year. We saw growth in retail casualty and across various segments of our financial lines portfolio, partially offset by declines in Lexington, driven by property, where we are continuing to take disciplined actions to effectively manage the competitive environment, which I will discuss in more detail. International Commercial net premiums written increased 10%, driven by growth in property and marine, partially offset by financial lines, where we continue to be targeted and disciplined in our underwriting.
In global commercial, retention was 88%, and new business, including our strategic transactions, was $1.9 billion, a year-over-year increase of 37%. Our team made outstanding progress improving the performance of our Global Personal Insurance business. Net premiums written increased 8% in the quarter, driven by momentum and Accident & Health, reflecting our team's ongoing focus on building a robust pipeline that has resulted in several notable new client wins, as well as continued organic growth in our high net worth business. Finally, we returned $904 million in capital to our shareholders in the second quarter, inclusive of $641 million in share repurchases and $263 million in dividends. Let me share some observations on the current market environment. There's a lot of conversation about where we are in the cycle.
I would characterize the market as transitioning from an extended phase of broad positive pricing into a more selective environment, where profitability and growth are increasingly dependent on line-specific dynamics. Over the last several quarters, capacity has increased significantly across the market, including through E&S carriers, MGAs and MGUs, delegated authority structures, ILS, and sidecars. This influx of capacity has created competitive pricing pressure in certain lines like property, we believe it has also created opportunities. Our experience shows that in this type of environment, clients tend to become more discerning about the origination of capacity. They distinguish among providers that are simply pass-throughs for third-party paper or focus solely on excess coverage from those that offer holistic solutions, along with underwriting excellence, client service, and responsive claims handling. This is where AIG is strongly positioned.
We are seeing this play out in property, where our expertise and the diversity of our global property portfolio are important advantages. Last quarter, we detailed the challenging dynamics in the North American property market, particularly in E&S, where pricing has continued to be under pressure, fueled by excess capacity and competition. Given the ongoing rate pressure, we have intentionally continued to contract our Lexington property portfolio in targeted areas while selectively growing the parts of the property portfolio we believe will deliver the best risk-adjusted returns. Where we see pricing that is not adequate, we are offering terms that reflect our view of the risks. As a result, we are retaining business where we can achieve acceptable terms while walking away from business that does not meet our underwriting standards.
This has resulted in a meaningful nine percentage point reduction in premium retention at Lexington property in the second quarter. The pricing environment, combined with our deliberate actions, have reduced overall growth in North America by over three percentage points. Our North America retail property portfolio has a different composition than our Lexington property portfolio. While the environment remains competitive, we continue to find targeted opportunities for growth, including through our Everest renewal rights transaction. In international property, rates are declining at a more moderate pace than in North America. This remains an attractive portfolio with opportunities in many countries for sustained profitable growth, supported by lower peak catastrophe exposure. Turning to casualty, our underwriting discipline and technical claims expertise have positioned us well across our portfolio. In North America retail casualty, pricing is up double digits and remains above loss cost trends.
While rate increases have moderated from the elevated levels we saw at the peak of the market cycle, we are focusing on maintaining rate adequacy and strong risk-adjusted returns. In North America excess casualty, we are achieving mid-teen pricing increases, and we have been disciplined on attachment points, terms and conditions, limits, and risk selection. In international casualty, we have a broad geographic portfolio with a significant portion of our business in markets with lower litigation environments. While there is increasing competition and pricing is beginning to become more competitive in some areas, we continue to see select opportunities for profitable growth, supported by our underwriting and claims expertise, as well as our differentiated multinational capabilities.
In global specialty, we are closely watching the energy and aviation markets, where we are seeing pricing that we believe does not fully reflect heightened exposure in the Middle East conflict and recent large industry losses. In contrast, political violence and terrorism rates increased in the second quarter, driven by the elevated risk exposure associated with the broader conflict. For example, our political violence pricing increased 9% in the second quarter compared to a decrease of 8% in the first quarter. We are also seeing broader demand for these products as clients sharpen their focus on risk mitigation and protection. In summary, across our global and diverse portfolio, we continue to deploy capital selectively where pricing, margin, and risk quality are within our appetite and deliver targeted risk-adjusted returns.
I'd like to expand on AIG's unique competitive advantages and how we intend to convert these strengths into sustained earnings growth and long-term value creation. AIG has an enviable global platform, deep underwriting expertise, a broad set of products and risk solutions, robust claims capabilities, and a team of outstanding colleagues. We also have one of the most recognized brands in the industry, which helps us compete in markets around the world. Together, these strengths make AIG a leading global underwriting company. Our durable foundation enables us to expand the ways in which we access business, deploy capital, and provide value to clients and distribution partners to become even more relevant in the market.
At the core of our strategy is a significant opportunity to become an essential partner to our clients by connecting our businesses more effectively across AIG and deploying capital in innovative ways to drive long-term value. Our growth plan is built around five strategic priorities. Delivering exceptional underwriting performance and deploying capital towards opportunities with the strongest risk-adjusted returns. Using our balance sheet and reinsurance program efficiently to support profitable growth while prudently managing volatility. Expanding our AI capabilities to improve decision-making, quality, and productivity. Maintaining expense discipline. Investing in our team and talent to strengthen execution, connectivity, and our ability to bring the full capability of AIG to our clients. Let me go deeper into how we will execute against each priority, beginning with underwriting performance and our strategic deployment of capital. Our colleagues have done exceptional work transforming AIG and building a stronger, more focused company.
That foundation allows us to be more responsive to client needs and more effective in supporting our partners while maintaining underwriting excellence. Across every line of business, we look at risk at the individual level, the portfolio level, and through the lens of different distribution strategies in order to bring forward innovative solutions. We are focused on growing attractive areas of our portfolio by bringing together AIG's global underwriting, claims, and risk expertise to help clients and partners better understand the risks they face and deliver more comprehensive solutions that support their evolving needs. Let's take data centers as an example. These are end-to-end multi-line projects for global AI hyperscalers that require financing, construction, marine, cyber, energy, operational, multinational programs, and bespoke risk solutions.
Thank you, Eric. Good morning. We had a strong Second quarter and exceptional first half of 2026. I will expand on the financial highlights. Second quarter General Insurance adjusted pretax income was $1.5 billion, up 4% from the prior year quarter, reflecting higher underwriting income and higher interest income, partially offset by lower income from our alternatives portfolio. Net premiums earned were $6.2 billion, up 5% year-over-year. Underwriting income increased 10% year-over-year to $686 million, driven by improved accident year underwriting results and more favorable prior year reserve development, partially offset by higher catastrophe losses. For the first half of 2026, General Insurance underwriting income increased 68% to $1.5 billion, reflecting an excellent 13% increase in accident year underwriting earnings, lower catastrophe losses, and more favorable prior year reserve development.
Overall, first half 2026 net premiums written grew 13%, which we expect to support earnings growth as it earns in over 2026 and 2027. Moving to second quarter underwriting ratios. General Insurance accident year combined ratio, as adjusted, was 88.1%, an improvement of 30 basis points from the prior year quarter. The improvement was driven by a lower expense ratio of 30.8%, which improved 20 basis points year-over-year. As we've mentioned in prior calls, it is better to look at our expense ratio over the course of the year to see the trend in underlying improvements. As of June 30th, 2026, the trailing 12-month expense ratio was 30.7%, reflecting increased operating leverage and continued expense discipline. As Eric stated, we are on track to bring our expense ratio below 30% for Full Year 2027.
The accident year loss ratio, as adjusted of 57.3%, improved 10 basis points from the prior year quarter. Total catastrophe charges for the quarter were $210 million and included $75 million in net losses related to the Middle East conflict. Prior year development, net of reinsurance and prior year premium, was $145 million favorable and included $146 million of net favorable loss reserve development, $26 million of ADC amortization, and $27 million of prior year return premiums. The favorable development was driven primarily by continued favorable loss experience, most notably in U.S. workers' compensation of $177 million and U.S. property and special risks of $79 million. This was partially offset by strengthening in U.S. excess casualty of $74 million, predominantly in accident years 2016 and 2023.
Specifically, in 2023, we took the opportunity to slightly increase that accident year to bring it in line with the level of prudence reflected in 2024 and 2025. There are several key factors in our process that give us confidence in our reserves. First, the continued execution of our limit management strategy has resulted in lower limits with tighter terms and conditions across our portfolio. Second, our comprehensive reinsurance program helps to mitigate severity risk while providing an additional layer of external validation from our reinsurance partners about our assumptions. Third, we conduct a review of the entire portfolio every 90 days, allowing us to identify emerging trends earlier and react quickly. We complement this with monthly looks at actual versus expected movements and regular interactions to inform the underwriting, claims, and actuarial feedback loop. We continue to feel confident with our reserve position.
Overall, second quarter General Insurance calendar year combined ratio improved 30 basis points year-over-year to 89.0%. The combined ratio for the first half of the year was 88.1%, an improvement of 450 basis points, an outstanding result. Moving to segment results. North America Commercial accident year combined ratio as adjusted was 86.7%, an increase of 50 basis points over the prior year quarter. The accident year loss ratio as adjusted was 63.4%, an increase of 30 basis points, driven by changes in business mix as we reduced certain property lines and earned in more casualty business, combined with rate pressure, particularly in property. The expense ratio increased 20 basis points, driven by the acquisition ratio, which was 50 basis points higher due to mix change, while the GOE ratio improved by 30 basis points.
This quarter included 410 basis points of catastrophe losses and 680 basis points of favorable prior year development. Overall, North America Commercial calendar year combined ratio was 84.0%, an excellent result and an improvement of 190 basis points from the prior year quarter. International Commercial accident year combined ratio as adjusted was 87.3%, an increase of 230 basis points. The accident year loss ratio was 55.2%, a 100 basis point increase year-over-year, reflecting rate pressure partially mitigated by underwriting actions and reinsurance benefits. The expense ratio rose 130 basis points to 32.1%, driven entirely by a higher acquisition ratio. The increase in the acquisition ratio was primarily driven by strong new business growth and changes in business mix.
While our recent strategic transactions benefited the overall expense ratio in the quarter, they contributed to a higher acquisition ratio, which was more than offset by the benefits in the GOE ratio. The International Commercial calendar year combined ratio of 91.3% included 390 basis points of catastrophe losses, driven by $75 million of net losses related to the Middle East conflict. Moving to Global Personal. The business generated strong growth momentum in Accident & Health and high net worth, as Eric outlined, while delivering continued profitability improvement. Second quarter underwriting income of $114 million increased nearly $90 million year-over-year, and our adjusted accident year underwriting income more than doubled. The accident year combined ratio as adjusted was 91.2%, a 490 basis point decrease year-over-year, driven by strong improvement in both the accident year loss ratio and expense ratio.
The accident year loss ratio improved 270 basis points to 51.5%, driven by underwriting actions and lower reinsurance costs. The expense ratio improved 220 basis points, primarily driven by continuing benefit of more favorable high net worth commission terms. This quarter included 170 basis points of catastrophe losses and de minimis prior year development. Second quarter calendar year combined ratio was 92.9%, an improvement of 560 basis points year-over-year. For the first half of 2026, the combined ratio was 91.2%, a 1,200 basis point improvement. We are pleased with the progress we are making as the actions we've taken to reposition the portfolio continue to earn through. Moving to pricing, starting with North America Commercial. Eric outlined details of the property market, so my comments will focus on other lines. Excluding property, North America Commercial renewal pricing increased 5% year-over-year.
North America Casualty pricing remains favorable, with Retail Casualty pricing increasing 10%, exceeding loss cost trend, and including a 14% pricing increase in Excess Casualty. In Glatfelter and Programs, which focus on small and medium businesses, pricing increases were 7% and 5% respectively. In Financial Lines, our pricing excluding cyber was flat for the quarter, which improved from the prior year. We have been successful in obtaining rate across all segments of our book, and in targeted classes of D&O, we have seen positive pricing change. Overall, we believe Financial Lines will be less of a headwind moving forward. In International Commercial, renewal pricing declined 6% following multiple years of compounded rate increases. By line of business, Global Energy saw pricing decrease 15%, and Financial Lines pricing was down 4%.
Where the market conditions are highly competitive, we will focus on preserving margin and being disciplined in the application of our underwriting standards. Moving to net investment income. Second quarter total net investment income on an APTI basis was $908 million. General Insurance net investment income was $871 million flat year-over-year. In our core fixed income portfolio, net investment income grew 4% from the prior year quarter. During the second quarter, we continued to reinvest at higher yields, with the average new money yield on our core fixed income portfolio roughly 60 basis points higher than sales and maturities. The annualized yield was 4.72%, a 30 basis point improvement over the prior year quarter. The steady growth in our core fixed income portfolio was partially offset by lower alternative investment income of $13 million, down from $48 million in the prior year quarter.
The decline was due to private equity, which posted a loss of $8 million. As a reminder, private equity is reported on a one-quarter lag, and the second quarter results reflected the market volatility and valuation marks from the first quarter of 2026. We continue to execute on our previously announced investment partnerships, where we have deployed capital and expect to see the benefits moving forward. Moving to other operations. Second quarter adjusted pre-tax loss was $142 million versus a loss of $101 million in the prior year quarter. The difference was driven by lower net investment income and other of $39 million compared to $92 million in the prior year quarter, which included $27 million of Corebridge dividends. In addition, the current quarter had lower short-term investment income. Turning to capital management, we have a strong balance sheet and significant financial flexibility.
Our capital management priorities remain focused on deploying capital to support profitable growth and delivering attractive long-term returns to shareholders. We maintained our strong financial position and ended the quarter with $9 billion of debt outstanding and a total debt to adjusted capital ratio of 17.6%. In May, we sold approximately 25 million shares of Corebridge common stock for $710 million, which was the remainder of our holdings. This sale marks the culmination of our five-year separation process and a significant milestone as we've transformed into a focused global property and casualty insurer. Book value per share at June 30th, 2026, was $77.39, up 4% from the prior year quarter, reflecting growth in net income, as well as the favorable impact of lower interest rates, partially offset by capital returned to shareholders through dividends and share repurchases.
Thanks, Keith. Michelle, we're ready for questions.