NEW YORK—American International Group Inc. President and CEO Robert H. Benmosche on Friday lauded the insurer's progress in emerging from its financial crisis following the insurer's report of $7.79 billion in net income for 2010 vs. a $10.95 billion loss for 2009.

AIG's results reflect the previously reported $4.2 billion of reserve strengthening in the fourth quarter for its Chartis Inc. property/casualty operations, which was net of $435 million in discount and loss-sensitive business premium adjustments.

For the quarter, AIG posted $11.18 billion in net income vs. an $8.87 billion loss in 2009.

Chartis' net written premiums declined 2.6% for the year, to $29.87 billion, and fell 3.3% for the quarter, to $6.7 billion, AIG said.

This excludes the consolidation of net premiums written by Japanese insurer Fuji Fire & Marine Insurance Co. Earlier this month, Chartis announced a cash tender offer through its Chartis Japan Capital L.L.C. subsidiary for all common shares and stock acquisition rights of Fuji that it did not already own. It held 54.7% of Fuji as of Feb. 10.

Chartis reported a 116.8% combined ratio for 2010 vs. 108% for 2009. For the quarter, it reported a 160.5% combined ratio vs. 132.5% for the comparable quarter in 2009, with the reserve charge driving most of the underwriting losses for both the quarter and the year, AIG said in the financial information it released.

At the insurer's first investor call in two years, Mr. Benmosche said Friday that AIG has been able to “completely repay the (Federal Reserve Bank of New York) two years ahead of schedule,” which he said is a “huge milestone” that has been achieved because of AIG employees' dedication and the company's “remarkable partnership” with the New York Fed.

“The reserve strengthening was a result of our in-depth review of reserves,” Mr. Benmosche said. “We are committed to holding the right level of reserves based on a highly detailed, thorough, thorough process. We continue to hold more statutory surplus than any P and C commercial insurance competitor in the U.S. market,” he said.

Further, he said, the reserve review updated estimated losses for all years, including the 2006 through 2009 accident years, “years to which approximately 50% of the reserve strengthening, excluding asbestos, applied.”

“Net premiums written remain healthy at Chartis, and we continue to hold the line on pricing,” Mr. Benmosche said. “We have adjusted our business mix to reduce risk and to yield more sustainable earnings.”

In particular, Chartis has “deliberately and strategically” shifted its mix of business away from lines such as workers compensation and excess casualty toward higher-margin, less capital-intensive segments such as consumer and specialty commercial business, he said.