Jeff, I can't stand the suspense anymore. Let's get going. It is 11:00 A.M. Thank you very much. Well, good morning. I'm Steve Miller. I'm Chairman of AIG's Board of Directors, and I welcome you to this year's annual meeting of shareholders for 2015. Joining me and speaking with you will be Peter Hancock, our President and Chief Executive Officer. This meeting is also being webcast, and we welcome those listening from 175 Water Street. We are first going to conduct the official business of the meeting. Then Peter will tell you more about the important developments at AIG over the past year and what he sees going forward. Following that, we will welcome questions and comments from shareholders in attendance about matters that you'd be interested in. I hereby call to order the 2015 annual meeting of shareholders of AIG.
You have been provided with the procedures that we are going to follow. I would just ask you all to adhere to our procedures. First, I'd like to introduce the 13 nominees, including Peter and me, for AIG's Board of Directors for the coming year, all of whom are currently serving as Directors of AIG. The nominees are seated in the first row right here. I'd like them to stand as I read their names. Don Cornwell, Peter Fisher, John Fitzpatrick, Peter Hancock, William Jurgensen, Chris Lynch, George Miles. The other Miller, Henry Miller. Suzanne Nora Johnson, Ron Rittenmeyer, Doug Steenland, and Terry Stone. Myself, Steve Miller. I would like to recognize at this time Arthur Martinez, who is retiring from the Board. I want to thank Arthur for his significant contributions to AIG over the past six years.
We did have a little celebratory dinner with him last night. On the same note, I want to thank all of our Directors for agreeing to stand for election and being willing to serve. Thank you all. A certified list of shareholders is available for inspection. Copies of our AIG Annual Report, including the Form 10-K for the year 2014, the proxy statement, and the Form 10-Q for the first quarter of 2015, are also available to you. I now call upon AIG's Secretary, Mr. Jeffrey A. Wellingham, to present the affidavit of notice of this meeting and other formalities. Jeff?
Thank you, Steve. I now submit the affidavit of Broadridge Financial Solutions, certifying that each shareholder of record at the close of business as of March 18, 2015, was mailed either a notice of availability of proxy materials mailed on March 30, 2015, or a package containing AIG's 2014 Annual Report, notice of this meeting, a proxy statement, a proxy card, and a return envelope mailed commencing on March 30, 2015. I'd like to remind everyone that the remarks made today may contain forward-looking statements concerning future performance, events, plans, or objectives. These forward-looking statements are not guarantees of future performance or events. Actual results and events may differ, possibly materially, from those anticipated in any such forward-looking statements.
Factors that could cause such differences include the factors described under Management's Discussion and Analysis in our 2015 first quarter 10-Q and our 2014 10-K, as well as under Risk Factors in our 2014 10-K. AIG is not under any obligation, and expressly disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. The information provided today may include non-GAAP financial measures. The reconciliation of such measures to the comparable GAAP figures are included in AIG's annual report to shareholders, and also in our 2014 and first quarter 2015 financial supplements, which are available on our public website. Jim Rheard has been sworn in as our independent inspector of elections. He has advised me that a quorum is present. Mr. Chairman?
Well, thank you very much, Jeff. Proceeding to the official business of today's meeting, I will present the list of proposals under consideration today as presented in the proxy statement. After the list has been presented, if any shareholder wants to comment on or ask a question about any of these proposals, a microphone can be brought to you, and I will recognize you. The first proposal is the election of the AIG Board of 13 nominees that I introduced just a few moments ago to serve as directors until the next annual election and until their successors are elected and qualified. The second proposal is a non-binding resolution to approve executive compensation. The third proposal is the ratification of the selection of PricewaterhouseCoopers as AIG's independent registered public accounting firm for 2015. Are there any questions or comments on any of these proposals?
If so, please raise your hand and wait to be recognized and for a microphone. There will be time later in the meeting here for general questions. Questions and comments at this point will be limited to the proposals just presented. I remind you of the procedures we're going to follow for questions and comments and ask that you work with us to adhere to them. Okay, I don't see any questions being asked. We will therefore now proceed to vote on the three proposals that have been properly presented to the meeting. The polls are now open. If anyone wants to vote now, please raise your hand and we will have a ballot brought to you. The next question would be, has everyone voted who would wish to vote? Seeing no activity.
If so, I declare the polls closed and ask that the ballots be delivered to the Inspector of Election. It is my privilege, great privilege, to stand here today and say a few words about the great progress that the company has made in this past year. 2014 was a year of decision and action, and we focused on staying the course while moving forward and creating sustainable value for our stakeholders. The most important decision was the selection of the leader who would succeed Bob Benmosche as AIG President and CEO. After a comprehensive process to bring the best leadership to our stakeholders, the board, with great confidence, selected Peter Hancock as AIG's new President and CEO, and we announced that in June, and Peter officially took office on September the 1st. Sadly, as you all know, Bob passed away in February.
He was a truly remarkable person and leader for this company. He led the people of AIG to achieve the unimaginable, executing perhaps the largest, most significant turnaround in the history of American business. The board witnessed firsthand the effect of Bob's philosophy, which is when you give people the freedom to act and they act responsibly, they are capable of amazing things. On behalf of the board and so many others, we will always be grateful to Bob. With Peter, we have a leader who brings the right characteristics to lead AIG toward our vision of being the world's most valued insurer for our clients. This includes his deep financial experience that helped us de-risk the company and broad international experience from having lived and led in places around the globe.
Shortly after Peter officially took office in this new role in September, he aligned the company by client segment rather than by product line, further bringing together our capabilities and bringing us closer to our clients. Another moment of change occurred just recently on April the 16th of 2015, when my fellow board members announced that Doug Steenland will succeed me as non-executive Chairman of the AIG Board of Directors effective on July the 1st. It has been my privilege to have served as chairman of the AIG board since July of 2010. We have AIG's corporate governance guidelines that provide that generally an individual should not serve in that role for more than five years. As a member of the board since 2009, Doug is extremely well suited to serve in this role and brings an impressive resume of leadership skills and experience.
On behalf of my fellow board members of the board, we wish Doug well, and I want our shareholders to know that you are in solid and trusted hands. For me personally, it has been an incredible honor to serve as chairman of the board during the past five extraordinary years of AIG's history, and I look forward to continuing service on the board under Doug's leadership. AIG is no stranger to change, and 2014 was no exception with new leadership and new structure. What matters is that the changes make us better and move us forward in the right direction. I, along with the other directors, have had the pleasure of observing firsthand the people of AIG working together to bring the company to where we are today, and I look forward to where we will take AIG next.
We look forward to the changes that 2015 will bring and even more opportunities to deliver value to our clients and shareholders. Great. Okay. Turning back to the official business of the meeting, I've just been handed the report of the Inspector of Election. He certifies that each of the director nominees standing for election has been elected by a majority of the votes cast, and that all of the proposals have been adopted. Later today, we will issue a press release with these results in detail. With the official business of the meeting therefore concluded, I'm now going to turn the floor over to Peter for his remarks, and then we will follow that with general questions and answers.
I remind you that the procedures we're going to follow for our Q&A, and ask that you work with us to adhere to them, which is please raise your hand, wait to be recognized and for a microphone to be brought to you, and direct your questions to me. I'll be standing here with Peter when he concludes his remarks to take your questions, should there be any. Please wait for a microphone as this meeting is being webcast. It will make sure everyone will be able to hear your question. With that, Peter, if you'll come up and make your remarks.
Thank you, Steve. Good morning, everybody.
Good morning.
Thank you for being here today for the annual meeting. Before I start, I want to say congratulations to Doug Steenland and welcome him in advance as our new Chairman of the Board starting July 1st. Doug, I look forward to working more closely with you in this important new role. I'd also like to thank Steve Miller, who will be staying on the Board but will be stepping down as Chair. Steve led this company through the most challenging and yet rewarding years of its existence. On behalf of AIG, Steve, thank you very much for your leadership and hard work. I want to begin by taking a moment to talk about former CEO Bob Benmosche, a great leader, my mentor, and my close friend. Bob invited me to join this extraordinary organization five years ago.
Bob had that rare ability to help people see the strength within them and overcome the fear that we, as human beings, feel. He helped us to have the courage to release the energy and optimism that led us to where we are today. We're forever grateful to Bob for giving us a future to look forward to. As Steve said, AIG aspires to be the world's most valued insurer to our clients, investors, employees, and broader society. This means that we take a longer view, balancing our pursuit of sustainable performance with meaningful improvements to our near-term performance. We choose intrinsic value as our true north, as market value can over or undershoot intrinsic value. The changes we're making will help us realize our objectives today and well into the future and maximize our intrinsic value. 2014 was a year of transition and transformation.
We built on our work over the last several years to make AIG a simpler, smarter, and stronger company. After becoming CEO in September, I further refocused AIG's businesses. We aligned the businesses by the clients we serve, commercial and consumer, rather than the products we offer. Our streamlined business model still features diversification across client segments, product lines, and geographies. The diversification differentiates AIG from major peers and provides for overall credit strength. During 2014, we continued to make progress deploying our capital to enhance long-term returns. We completed $4.9 billion in share repurchases. We strengthened AIG's financial flexibility at the parent level with $10.4 billion in distributions from our insurance companies. We reduced our overall debt by approximately $10.5 billion, including replacing high-cost illiquid debt with new, more liquid debt at lower yields.
We pursued strategic acquisition opportunities, such as Ageas Protect in the U.K. and Laya Healthcare in Ireland, which both have great growth potential. If 2014 was a year of transition and transformation, 2015 is about value and sustainability. We can now focus more strategically and diligently on delivering what our clients value most in the most efficient way. This is value-based management. We're focused on achieving a balance between growth, profitability, and risk, and analyzing opportunities for their ability to deliver profitable growth at an appropriate risk level. To this end, we announced three financial targets through 2017 and made progress towards each of these targets during 2014. First is growth of at least 10% per year in book value per share, excluding AOCI and DTA. In 2014, we grew book value per share by 12%.
Second is a reduction in net general operating expense of 3%-5% a year. Last year, we reduced our net GOE by 3.5% after adjusting for severance in 2013. Third is an increase in normalized return on equity of at least 50 basis points a year, again, excluding AOCI and DTA. In 2014, we achieved a normalized ROE of 7.4%. This reflected a nearly 5% growth in core insurance pretax operating income and improved capital efficiencies. Also, in 2014, we increased shareholders' equity 6.4% to $106.9 billion. We recognize that companies often jeopardize their ability to deliver consistent growth when they postpone much needed investments. Our targeted expense reduction still incorporates investments in areas such as compliance, science, and IT. We're investing in IT to improve the experience and enhance the capabilities of our employees and clients, including installing modern applications that will make us more competitive.
Our first step in this process was the recent migration of thousands of legacy applications to run on Windows 7, so that now most of our desktops can operate more quickly and efficiently. As I summarize our initiatives for 2015, you'll hear some familiar themes. We're applying science to better select and price risk and deliver superior risk-adjusted returns through enhanced data, analytics, and evidence-based decision-making. We're investing in new global claims and underwriting platforms and improved global call center and exposure analysis resources to deliver first-class service to clients and decrease our loss ratio. We're reducing costs and deploying capital more efficiently by, among other actions, integrating our Japanese businesses and building a new distribution platform for our Japanese agency network. We're floating or selling businesses that lack current or realizable potential synergy with our core operations. Science, IT, expense management.
These are objective means for delivering value to our clients and shareholders. Insight, expertise, trust, courage. These are some of the ways that our employees differentiate AIG in the hearts and minds of our clients. This year, we are increasing our emphasis on building teams that bring together capabilities and diverse perspectives from across the company and the globe. I greatly look forward to continuing to work with our board, our leadership team, and AIG colleagues worldwide to realize the potential of one AIG. Once again, thank you for being here today. I'd like to open the floor to questions and turn the meeting back over to Steve.
Okay, well, that concludes the formal part of the meeting. We're now open for questions from shareholders. Okay, I see one hand raised there. If you could please wait for the microphone. It's right in the front row there. Yeah.
Good morning. My name is Zach El Shimi. I attended the meeting in 2010 and asked about what we'll do to recoup the money from the insurance that submitted to AIG, which was fraudulent. You told me at the time we have a fine legal team. They will look at it, and there was action taken after that. Some client going to take them to court and will get refund or to get to recoup the money. What will happen for this money? It is going to the current budget, or it going back to the old shareholder before they bailout? Because this money is paid with the bailout money from the government. It increased the percentage equity, get it to the government and will rebate again with rebate the bailout to the government.
If the money go back to the current budget, this means the government gets rebate again four times. Number two, I am the one who behind the AIG bailout case by Mr. Greenberg, and thank him very much for that. I send him a letter asking to take the action with my memorandum about the legal point that this bailout is unfair, unjust, illegal and should be reversed. I raise the issue in the meeting 2011 and the late Mr. Benmosche told me the bailout is history. I said that in the TV program, Nightly News, and I told him, "Sir, history doesn't make people make history." He told me without the government action, AIG would be bankruptcy. The same line is taken by the government attorney in the hearing of AIG bailout. I can tell them pause, that they know the effect of AIG going bankruptcy.
It will damage the whole U.S. and the world economic system. The money of the bailout that the government, even if not get the money, is very cheap price to pay to protect the U.S. and international economy. In case Mr. Greenberg, that I thank him again, get the ruling in his favor, is AIG will going to compensate the government for the money that it will pay to Mr. Greenberg, or not? Another thing, the situation for the bailout could affect the national security, as I said before, and it should be dealt totally by the government as they pay for fighting terrorism around United States and the world. They pay more than $1 trillion for potential threat to U.S. The AIG, if it's going down, as I said before, it will be imminent disaster to the U.S. economy and the people.
I want to know the situation in both cases. Who will repay the government if Mr. Greenberg did well, and what happen to the money we collected from the other side? Another thing, the government responsible for the crisis in 2007 and the 2008, because the policy of deregulation for it follow since the 1980, to deregulate the financial system that is put after the Great Depression to protect the financial situation in the United States. The deregulation allow the financial guru, hedge fund, people taking risk, take advantage. They got together the subprime mortgage. They put them security. They get high rating from the rating agency. They're selling them to investor, and they get insurance on them. They know that the coming crisis of the housing sector. They looks like the people who put his house on fire or car looking for insurance money.
These people is criminal, should be prosecuted, the AIG should get the full money back from them. Another thing for me-
Well, wait. One of our procedures is that we generally limit the questions and comments to three minutes so that others can have an opportunity. I think you've had plenty of opportunity to make your views shown. Why don't we go on into this and try and answer the questions that were embedded in your comments.
Thank you.
Thank you very much. Do you want me to get Tom up here?
No, I'm happy to. What I heard was the one question, which is AIG required to reimburse the government in the event of the Starr case against the U.S. government succeeding? We have a full disclosure of that in our 10-K explaining the exact nature of our obligations. All I would say to elaborate on that is that this is in the hands of the courts. It is subject to multiple levels of appeal, will not be ultimately resolved for many years to come.
We got a question over here. I'll take.
Hello, my name's Herschel. I have one question. It may be premature. It's very broad. I know you touched on it earlier. You told me you were going to start getting involved in, was it Ireland in health insurance? Could you elaborate on that, please?
Yeah. Peter?
Yes. We acquired a company, Laya Healthcare, which is the second largest health insurer in Ireland. Private health insurer. It insures about 500,000 Irish citizens. We think that this is a very modern and an exciting opportunity for us to incorporate supplemental health, in particular, in the offerings to our clients. As you know, Ireland is a member of the European Union, provides us with a window to 27 countries across Europe, ultimately. In the short term, it consolidates what is a sizable investment in a number of different existing activities that serve consumers in Ireland in both auto insurance and other personal lines. It just completes a broader product offering to Irish consumers.
Just one added comment there. We are a global company. We operate in many countries all over the world, but we don't have a one-size-fits-all approach to those markets. We instead look for the opportunities that are unique to each of the geographies. In Ireland, we think this is a great new area for us to get into. Thank you for the question. Clear in the back over there.
Hi, my name is Mel Steebank. I know that AIG has a real estate subsidiary that develops and invests in real estate around the world. Could you expand upon the returns you're getting and if so, if they're meeting your expectations?
We have a group that has investments in real estate both as equity investments as well as secured and unsecured debt. As an asset class, it's part of a broad set of choices we have for investments both within the insurance company's balance sheets as well as at the holding company. Some of the equity investments are legacy from many years ago, and those have done extremely well in the recovery. Some of them have just reached completion and will be for sale at the right moment. We don't disclose the precise returns on that total portfolio. It's part of the broader net investment income that we disclose in our financial supplements. It's approximately $4 billion of equity investments, to give you a sense of scale, out of a portfolio of over $350 billion. It's a modest part of an overall portfolio.