American International Group Inc. achieved significant increases in retail and wholesale property rates in the first quarter and expects further rate hikes this year, the insurer’s top executive said Friday.

Going forward, AIG, which reported a lower first-quarter profit late Thursday but higher underwriting income, plans to simplify its corporate structure and reduce costs further as it continues its successful turnaround since replacing its top management in 2017.

Speaking on a conference with analysts Friday to discuss AIG’s results, Chairman and CEO Peter Zaffino said rates in AIG’s North America commercial business increased 7% in the first quarter, but there was variation between lines.

Wholesale property rates increased 35%, retail property rose 32% and international property was up 11%, he said.

In the second quarter, property rate increases are even higher, Mr. Zaffino said.

In contrast, high excess public directors and officers liability rates fell more than 20%, he said. In its financial lines business overall, “net premiums written contracted 9% due to increased competition putting pressure on pricing, as well as a continued slowdown in (mergers and acquisitions) and other transactional business.”

AIG, which has focused on turning around its property/casualty operations, separating its life and retirement business and reviewing its operational structure over the past several years, will continue to evolve its business model and will move away from its conglomerate structure, Mr. Zaffino said.

“We will eliminate overlap and significantly reduce the centralized infrastructure across the company, which will lead to a leaner business model,” he said.

Future parent expenses are likely to be 1% to 1.5% of premium, Mr. Zaffino said. Currently, parent expenses are between 3.9% and 5.4% a quarter.

“As we progress our future state business model, we anticipate achieving approximately $500 million in cost reduction to AIG parent and a cost to achieve of around $400 million,” he said.

AIG expected to complete a secondary offering of its life and retirement business Corebridge Financial Inc. in the first quarter but chose not proceed with the offering due to volatile equity markets, Mr. Zaffino said.

AIG still intends to go ahead with a secondary offering but will “explore other options that are aligned with the best interests of shareholders,” he said.

Earlier this week, AIG announced it had agreed to sell its crop insurance business to American Financial Group Inc. for $240 million.

AIG reported $23 million in net income in the first quarter compared with $4.17 billion in the same period last year. Much of the difference relates to the 2019 sale of its majority stake in runoff reinsurer Fortitude Group Holdings. It sold the business on a co-insurance basis, which continues to affect AIG’s mark-to-market, or fair value accounting valuation.

The insurer reported $1.64 billion in adjusted pre-tax income, a 4.7% decrease compared with the same period last year. Its main property/casualty business, its general insurance unit, reported adjusted pre-tax income of $1.25 billion, a 3.1% increase, and underwriting income of $502 million, up 12.6%.

General insurance reported gross premium written of $12.03 billion for the quarter, a 4.5% increase over the prior-year period, and net premium written of $6.97 billion, a 5% rise.

AIG’s North America commercial lines business reported $3.37 billion in net written premium, a 14.1% increase over the same period in 2022. International commercial lines reported $2 billion in net premium written, down 4.3%.

General insurance reported a 91.9% combined ratio, an improvement over the 92.9% reported in last year’s first quarter. Catastrophe losses totaled $264 million for the quarter.

Net investment income increased to $3.53 billion, a 9.1% increase over the same period last year.

AIG also increased its dividend payment by 12%, the first increase since 2016.

“The board was comfortable raising the dividend for the first time in many, many years because of the significant turnaround of GI underwriting results over the past five years,” said Sabra Purtill, executive vice president and AIG’s interim chief financial officer.