American International Group Inc. reported significantly lower premium in the first quarter as unit sales it completed last year cut revenue, but the insurer’s combined ratio improved as catastrophe losses more than halved and rates, particularly in liability lines, rose.

AIG is also continuing with its plans to shrink its costs over the next two years, including through an early retirement program, senior executives said on a call with analysts Thursday.

AIG reported after markets closed Wednesday that its net income for the first quarter totaled $1.19 billion, compared with $23 million for the same period last year. The increase was primarily driven by differences in net realized gains and losses related to its 2019 sale of runoff insurer Fortitude Group Holdings.

On an adjusted basis, after-tax income was flat at $1.2 billion, despite a 20% decline from Corebridge, its life and retirement business, which AIG is in the process of selling. AIG now owns 53% of Corebridge, compared with its 78% stake in the first quarter of 2023.

The insurer reported investment income of $3.9 billion for the quarter, a 10.5% increase over the same period last year.

Gross premium written in its property/casualty business, or general insurance, fell 23.9% to $9.16 billion, and net premium written fell 35.2% to $4.51 billion.

The reduction reflected the sale of Validus Reinsurance Ltd. to RenaissanceRe Holdings Ltd. last year, the sale of Crop Risk Services to American Financial Group Inc., and increased purchase of reinsurance, said Peter Zaffino, AIG chairman and CEO.

On a comparable basis, general insurance net premium grew 1% in commercial lines while personal lines premium was flat. Mr. Zaffino said AIG expects high-single-digit premium growth for the full year, noting that its increased reinsurance purchases largely took place in the first quarter, lowering its net premium disproportionately for the period.

North America commercial lines net premium fell 69% compared with last year’s first quarter but grew 4% on a comparable basis.

AIG saw growth in its excess and surplus lines unit Lexington, casualty and its captive insurance business, which was partially offset by continued rate reductions in financial lines, which include its directors and officers liability business.

Excluding workers compensation business, global commercial insurance rate and exposure levels for AIG’s book rose 6% on average; North America commercial lines increased 7%; and international commercial lines increased 5%. AIG did not detail increases including workers comp, but industry pricing indices have shown comp prices flat or declining slightly during the quarter.

The North America commercial rate increases reflected rising casualty rates, said Sabra Purtill, chief financial officer.

The increases included an 11% rise in Lexington casualty, a 15% increase in Lexington health care liability, and a 16% increase in excess casualty.

AIG’s first-quarter general insurance combined ratio improved to 89.8% from 91.9%, with North American commercial lines deteriorating to 88.1% from 87.1%.

The quarter’s catastrophe losses were $106 million, compared with $264 million in the first quarter of last year.

The sale of Validus and AIG’s reduction in gross property limits have reduced AIG’s probable maximum loss in its key zones by more than 40% compared with the same period last year, Mr. Zaffino said.

During the quarter, the insurer continued its AIG Next reorganization and expense reduction program, which includes an early retirement program offered to about 25% of U.S. employees. AIG expects 50% of eligible employees to take the offer. About half the eligible participants are based in the New York metropolitan area, Mr. Zaffino said.

The company expects the AIG Next program to generate about $500 million in annual savings by the end of 2025, Mr. Zaffino said.