Let's get started with the next presentation. Very pleased to have with us Albert Benchimol, CEO of AXIS. I'll let Albert introduce the rest of his team. Albert has been CEO for less than a year at AXIS, so he's still relatively new in the role, but we've already begun to see some changes at the organization. Of course, Albert did spend a decade at PartnerRe before that. I guess the title was CFO, but we always thought of him as more than just a financial executive at that company, and certainly he's proven that to date at AXIS. It's his first time speaking as CEO at this conference from AXIS. We're excited to have Albert here. Albert?
Thank you very much. Good morning, everybody. I'd like to introduce my team colleagues here with me. At my immediate left is Jack Greschi. Jack has been with the company from the very beginning and runs our insurance division, which wrote $2.3 billion of premium last year. At his left is Joe Henry. Joe is our CFO. He joined us last June to replace me when I took over the role of CEO. It's a pleasure to be here with you today.
As usual, probably like everybody else, the first thing I have to do is give you the safe harbor language that our lawyers compel us to introduce at every single meeting, which basically means that I'm going to tell you a lot of really good things about AXIS. You can't believe any of it. You have to do your own investigation to confirm it. Take my word, the lawyers have already reviewed what we said. It's still good. I'd like to start with a review of 2012 because, in fact, it was a very eventful year for AXIS. As Jay spoke, the first thing that we did, of course, is executed on the CEO transition that we had announced in the fourth quarter of 2011.
Beyond that, we also brought in a number of new executives to our executive committee, including, as I mentioned, Joe Henry. We also brought Jay Nichols to run our reinsurance division. We also brought on Eric Gesick as our new Chief Actuarial Officer of group. The good news here is to say that the team is in place. We've had really no turnover in our senior management team. Everything is really aligned for us to move forward as a team going forward. We took advantage of the fact that we had completed our first decade, made an executive management transition to challenge ourselves and ask ourselves whether or not the attributes, strategies, goals that we had set for ourselves were in fact the right ones to move forward in the second decade.
In fact, the good news is we confirmed our strategy and our approach to the market, and I'll discuss that with you today. We really did respond in a very positive way to an improving market, and the market is improving. I'm sure we'll talk more about that. It's fair to say that the improvements are not anywhere close to what you would expect in a cyclical hard market, but they are at least moving in the right direction. I will caution, however, that in many lines of business, as much as we're going to see improved underwriting results based on this pricing, we're also facing the real headwind of lower investment income for the industry. We need these pricing increases. Ultimately, AXIS delivered what I would consider to be satisfactory, though not outstanding performance in 2012.
That really was because although we had a generally favorable loss year, we also had a large loss with regard to Sandy. We delivered a high single-digit ROE. Our net income ROE approached 10%. The thing is that we are in our strongest financial position ever. Some highlights of 2012, our gross premium written grew 1.1%. This is despite the fact that we significantly reduced our reinsurance premiums as a result of the repositioning of our CAT portfolio. The net premiums written, however, declined modestly, about 2%. We grew most aggressively last year in those lines of business that provided great opportunity, but also where we had increased our reinsurance sessions at the beginning of the year. Therefore, that had an impact of ceding a lot of the growth that we had on the gross premium basis.
We did have good growth in net investment income that was at 5% plus last year. That was really on the back of very strong results and returns in our alternative portfolios, which offset obviously the lower yields that we experienced in our fixed income portfolio. We also had significant improvements in our combined ratio last year. Obviously, a big part of that was the fact that in 2011, we had severe catastrophes globally, both in New Zealand and in Japan, Thailand, and so on, whereas in 2012, we only had Sandy. Beyond that, we also had an improvement in our non-CAT ratio. That was really a result of the fact that we had significantly lower large loss incidents in 2012. We finished the year with a 13% growth in our book value per share after the payment of a larger dividend in 2012.
Let's take a broader, longer-term view of the organization for those of you who are less familiar with us. The first thing is that we are a hybrid insurer and reinsurer. There are two points that I want to make on the slide that you have which describes our insurance business. The first is the broad diversification that you see in that book of business. In fact, you'll see that we are strong both in the property lines markets as well as the professional lines markets. You'll note in the diversification table, the pie chart at about the 11 o'clock position is 7% gray wedge for accidents and health. I will remind you that 2010, that was zero. In fact, I will be talking to you later in this presentation about the growth of our accidents and health initiative.
The second thing that I want to highlight on this slide is the superior underwriting performance of our company. Over the first 11 years, we wrote on a gross basis of $20 billion in premium, around $14 billion net. Over that period of time, we have delivered an average combined ratio all in, everything included, of 83%, generating $2.1 billion of underwriting performance. In 2012, we had record gross premium written of $2.3 billion, net of $1.5 billion, and we delivered a combined ratio of 96% and underwriting income of $65 million, and that's because we had a large Sandy loss in the fourth quarter. Nevertheless, we still improved in 2012 over 2011, again, because of the lesser impact of international CATs and lesser impact of large losses.
In our reinsurance business you'll notice the same thing, which is a very broad diversification in our portfolio, including the way that we managed that growth across different lines over the years. One of the good news here is that except for some areas of property and CAT and some professional lines, there is essentially not as much aggregation with regard to the reinsurance portfolio over the insurance portfolio in lines like motor and international. Here too, I think our results are very strong. We wrote close to $16 billion of premium over the period of time, averaging an 89% combined ratio, generating $1.6 billion of underwriting profits. Last year, we reported the same 89% combined ratio, delivering $198 million of underwriting income, which was a very strong improvement over the prior year, again, on the back of less catastrophes.
The net of these two histories on the underwriting side, combined with an intelligent and prudent underwriting investment strategy and shareholder-friendly capital management is such that over our history we've achieved 13.6% growth in diluted book value per share adjusted for dividends. In terms of capital management, we have also given back a significant amount of our capital to our shareholders over the years. Throughout our history, we've given up in excess of $1 billion in dividends, and in addition, bought back close to $2.3 billion of shares through repurchases over the last 12 years. In 2012, in particular, we gave back to our shareholders $460 million in the form of dividends and buybacks, which was close to 100% of our net income last year.
Looking forward, as I mentioned to you, we really challenged ourselves to say, what we did over the past decade, is that what's going to succeed for us in the next decade? The good news is that by and large, the answer is yes. There are some modest changes, but fundamentally we are, and we will continue to be a specialty insurer and reinsurer focusing on adding value in the areas of large, complex volatile risks. We reaffirmed our commitment to our strategy, which was the bottom paragraph on that slide to be one of the leading global diversified insurance and reinsurance companies as measured by quality, sustainability, and profitability. We went one step further. We committed ourselves to our value proposition and to how we were going to achieve that.
Our value proposition was to provide our clients and distribution partners a broad range of risk transfer products, meaningful capacity, and unquestioned financial strength. Also how we would go about achieving that, which is to nurture an ethical, entrepreneurial, and disciplined culture that promotes outstanding client service, intelligent risk-taking, and superior shareholder returns. In terms of our economic goals, our economic goals were reaffirmed. We want to grow our equity and ROE. We want to maximize that within the context of an intelligent and prudent risk appetite. There's been a lot of talk over the last few months in recent years about whether or not financial goals should be changed or reviewed in the context of a lower interest rate environment. We thought long and hard about that. We determined not to do that. Our goal remains to achieve across the cycle a 15% ROE.
We are realistic and we know that in the current low interest rate environment that is going to be very difficult. On the other hand, we are looking at this thing to be over a 10-year period. Our expectation is that over time interest rates will in fact rise. We are looking at it that way. To me, the most important reason for not changing that 15% ROE is that I refuse to believe that our best days are behind us. We achieved a 14.2% ROE in the first decade of our company. We are committed to do everything that we can to beat that. Changing the goal, I think would have diluted that objective. That said, we recognize that achieving that objective is going to be conditioned on a number of factors that are beyond our control.
It will be CAT, it'll be the investment environment, the economic environment, and so on. While we are keeping that 15% ROE objective, we've also established for ourselves a relative performance objective. That is that when we look at our peer group, we want to make sure that we achieve top quintile ROEs or top quintile performance in whatever metric you look at with only average or modestly above average volatility around that performance. If the industry achieves only 5% over the next 10 years, we would probably be quite pleased achieving 12%. We definitely want to make sure that we have top quintile performance, whether it be in book value growth or ROE as compared to our competition. How will we achieve that? Excuse me. We will achieve those goals by following these strategic objectives.
One is diversifying growth for better balance and diversity in our portfolio to ultimately reduce that volatility that I spoke about. Enhancing our risk-adjusted returns through improved data and analytics, enhancing operational effectiveness, making sure that we are more cost-effective, more efficient in our processes and business programs, and ultimately developing and empowering our staff and our culture. We agreed to a six-point strategy to achieve those goals. One is recruiting the very best team in the industry. I've said repeatedly that an insurance company is nothing more than capital and people. If you don't have the right people, that capital will disappear very quickly. It's all about having the right people. The reason it's first on this list is because without the right people, we won't be able to execute on the next five points.
There's a real commitment in our company, and I'll talk about that a little bit more, with regards to recruiting, retaining, and motivating the best team in the business. The second, as we've discussed, is the development of a broader portfolio of risks, both within the U.S. and internationally. Enhancing and leveraging our relationships with our producers, making sure that we get the first and the last call on opportunities. Combining the pursuit of individually volatile and complex risks within the context of a diversified portfolio and a very committed risk management program. Finally, managing our risk appetite and our capital throughout the cycle to take advantage of opportunities. Again, I want to be very clear. Our goal is to grow our franchise. Our goal is to increase the ROEs and the book value of this organization.
You have our commitment that if we don't find those opportunities, we will return that capital to the shareholders. We've done that in the past, and if necessary, we will do it again. Finally, while we do that, making sure that we stay true to our commitment to delivering unquestioned financial strength to our clients. We're actually quite optimistic about delivering on that strategy because we're building on a very positive track record with significant attributes, and here are a few of them. The first is we do have a growing global insurance and reinsurance platform. We have over 30 offices in five continents, and those keep expanding, both in terms of offices, in terms of people, in terms of lines of business that we are offering in the market.
The second is a diversified book of business by product and diversity and geography, we will discuss that a little bit more with you. Very strong relationships with brokers and clients. That is one of the very strong differentiating attributes of AXIS. An excellent market reputation, and our ability to access and underwrite complex risk. In my experience being in this company over the last two years and over the last 18 months, traveling continuously to various offices, dealing with brokers, looking at the senior management team of all the brokers and producers that we deal with, the one thing that comes across over and over again is that AXIS punches above its weight against some of the very largest companies in the world because of the quality of our underwriters, because of the quality of our product and services.
Obviously, the combined ratios that I've reported to you are a testament to our ability to underwrite complex risks. There's an incredibly strong underwriting culture in this company. We've got the right capital, we've got the right ratings, and we have the track record to build on. In addition, this is good news not just for AXIS, but for many, we've got the wind at our backs in terms of market conditions. You can see here the various pricing metrics that we monitor in our book of business over, we do it on a monthly basis, but obviously here we're showing it to you for the last eight quarters. You can see that in the beginning of 2011, we were dealing with still a falling pricing market environment. That has gone positively over the last eight quarters.
We're now clearly in the positive territory. More importantly, in many lines of business, we're now getting rate on rates. Certainly through the second half of 2012, we were able to add to pricing in areas where we already added to pricing in the second half of 2011, and that's certainly providing some opportunities. I'm not saying that this is going to continue in a positive sloped curve over 2013 and 2014, but we remain comfortable that throughout 2013, we will continue to see positive pricing momentum across our overall book. How do we achieve that profitable diversifying growth that I talked about? We are going to be adding incremental resources into working, leveraging, deepening our relationships with not only the top-tier brokers with whom we've got excellent relationships, but also with the top 20 brokers below them with whom we haven't done as much yet.
What we want to do is, again, to expand the breadth of opportunities that we have available to us. We are adding to those resources as we speak. Secondly is to focus on sectors and geographies that have, in our mind, opportunities for greater growth than the rest of the market. You'll see how we're expanding in Latin America, expanding in Asia, getting into crop business, expanding our marine book. These are areas that we believe are going to be offering opportunities. One of the recent successes for us, for example, was renewable energy. In our London office, we have started accessing renewable energy insurance over the last couple of years, and that has been a very good book for us. It has grown, and it has delivered very good results. We are looking at areas that will grow.
Not only will we do that, the reality is that we still have very small market shares in a number of lines of business. We can, through the continuation of the good work that we've done over the last 11 years, continue to expand our market shares in those lines of business. We are pursuing a number of new initiatives. Ultimately, as we look through this, there will clearly be, over the next months and years, opportunistic acquisitions. We are not looking to achieve any kind of strategic transformation in the acquisitions. We're very fortunate. We have all the attributes. We have the right products. We have the offices. We've got the people.
There will be some bolt-on acquisitions here or there to complement a book of business or to add to a skill set or a distribution channel that we feel that we can add to. Wherever we are, whatever market we're in, whatever product line we're in, we're always focused on doing the same thing, which is to provide the best products in terms of the coverages that we're offering our clients, in terms of the consistent and sizable capacity that we can offer them. The best service in terms of responsiveness to our brokers and to our clients when they have an emergency, when they need something done, make sure that we're there for them.
In terms of claim handling, one of the most important issues where we differentiate ourselves is in the professionalism and in the timeliness of our claims handling, and we will continue to promote that. Finally, make sure that we have the right people and that they are seen both internally and externally as the right experts to deal with in terms of doing business going forward. It is the pursuit of these attributes and goals that will allow us to achieve our growth. I talked about initiatives, and I wanted to give you the sense of some of them. On the insurance side, one of our most visible initiatives recently has been our accident and health initiative, and I'll talk about that. That's not the only thing we're working on. As I mentioned, we've got renewable energy.
We've been expanding in professional lines, not so much in the U.S., but really internationally, in Europe, the U.K., Canada, Australia, and elsewhere. We think there's an opportunity for growth. We are recognized as a leader in professional lines both in the U.S. and internationally, and this is an opportunity for us. One of the things that we've done recently is announce our re-entry in the primary casualty market on the retail side. We got out of the primary casualty market in 2010, frankly, because we didn't like what was happening in the market. We had been reducing that book of business for a period of time. We are now starting to see the right indications that it will improve over time.
We've added incrementally to our staff, we've added incrementally to our resources, and we are going to start writing some primary casualty in the U.S. This will be slow. This is not going to be a significant generator of premium, certainly in 2013, 2014, but we think it's a good time to start planting the flag in that area. Of course, I mentioned earlier growing in Canada, Asia, and Australia, where we acquired an MGA and established a branch network in Australia. Our initiatives aren't only on the insurance side, they're also on the reinsurance side. There, one of the more visible ones would be our international agriculture initiative. Last year, we brought on a management team to expand our crop capabilities internationally. Certainly at the time, we had a longer-term plan on how to grow that crop business.
I can say that as a result of the impact of the drought in 2012, and what we've been doing since, the growth rates for our crop initiative is going to be accelerated, and you will see significant growth in that line of business in 2013. Likewise, we made an opportunistic hire in terms of marine reinsurance last year. Again, given the dislocations in the marine market, here again, this is an opportunity for us to get into this line of business after significant losses have been incurred in the marine market, and where there are opportunities to come in. Also internationally, our growth in Canada, Asia, and Latin America, where we have a strong position in Latin American bond and surety business. Let me talk a little bit more about the A&H franchise because this has been getting a little bit of visibility.
First thing is we have been attracted to the A&H market for quite some time, the reason we like the A&H market is because it is a profitable, large, diversifying risk for us. The other reason that we like that business is because not only it is huge, there are two large players in that market, but the rest of the market is highly fragmented. There's a real opportunity to develop a leadership position, a strong position by coalescing some of the opportunities that remain in that fragmented market. In late 2009, we really started building the A&H initiative. We recruited a team of professionals with a very strong track record of performance in the prior parts of their careers.
We set them up as a separate business unit within our insurance segment because we did not want them focused on anything other than the success of implanting an A&H franchise. We gave them resources to our entire international platform and resources. Because the intent was always to create a balanced portfolio, from the very beginning, we made the decision that we would go after clients both in the insurance and the reinsurance markets, and both internationally as well as the U.S. This was always going to be a global effort. Since we recognized that, yes, it is a fragmented market, but there's still two big gorillas out there, what do we do to differentiate ourselves and to take advantage of the opportunities?
Basically, we needed to make sure that we differentiated ourselves both in terms of service, in terms of product innovation, and in terms of compliance. The very many regulatory developments that we've had over the last three years, including, for example, the development of the Affordable Care Act, really changed the regulatory landscape. It created an opportunity to come in and distinguish ourselves by focusing on compliant products that responded to the evolving regulatory market. In many ways, the fact that we hadn't been there before was actually an advantage as compared to legacy carriers that had to first deal with making their existing accounts, their existing products and relationships compliant.
Right now, we are really spending our time and energy on smothering producers and accounts with service, with product innovation, focusing in many cases, accounts and producers that perhaps are below the radar of the larger players, but these are still producers who have good books of business, good volume, and they need that service. In many ways, it's a little bit of a parallel, if you would, of guerrilla warfare. When you own a big part of the market, you have to defend every part of it. When you're a new startup, you can focus on one, two, or three specific areas and give that all your energy, we can be successful even against larger producers. Our track record to date is delivering what we want it to. We literally wrote no more than $7 million of A&H premium in 2010.
We grew that to $127 million or so in 2011, over $160 million in 2012. This is a multi-year program. It requires a very broad platform. The G&A expenses are still such that we are not today reporting a positive contribution. We are confident that by 2014, this business will generate positive contribution, and within a couple of years, we are going to see beyond that. We will see ourselves at a book that will approach or exceed $500 million that will deliver in excess of a 15% ROE. When you start a business of this type, you take your opportunities where you can. The growth tends to be lumpy, whether it's in a market or reinsurance or here or there.
We feel that over time, as we fill out our book of business, we will get the balance that we are seeking between insurance and reinsurance, between accident and health, between U.S. and international. All I can tell you is although we have not generated positive earnings from our A&H business yet, we remain absolutely convinced that we are on course and that we will deliver on the goals that we've set for ourselves. Another area that we've spent a lot of time on in 2012 was optimizing and improving our cat portfolio. Essentially, we found upon review that in some cases, we were overexposed to certain zones, or in some cases, in markets that did not promise long-term superior returns. We've had a multifaceted approach.
Within Jack's insurance book, we've taken our commercial property book, and we've tried to move it away from purely concentrated in peak zones. We're looking at more diversification there. One of the more interesting things that we did last year is that we reviewed our approach to cat-exposed business generated by MGAs. When we started our organization, we obviously had a lot of capital but did not yet have all of the relationships, all of the avenues for business to allow us to use that capital. In those years, we entered into relationships with MGAs that have over time generated very attractive, very profitable business for us. However, as we've expanded, as we've got our own book of business, we now recognize that we can access cat-exposed business on our own. We can actually do a better job of creating the balance that we want.
Last year, we started the process of canceling 11 MGAs that had been generating cat business in our insurance area. I want to be very clear. We did not do this because we were losing money on these MGAs. In fact, some of these gave us 10 years of loss-free business. We just felt that this was not the best way to use our cat capacity. On the reinsurance side, as you know well, we've taken back our cat business. We got out of a number of businesses and contracts and treaties in the U.S. Northeast and in the Mid-Atlantic, and we grew in the Gulf. We grew in Florida where we felt there were better risk-return opportunities in that area.
Finally, as we were looking at how our two books of business between insurance and reinsurance were working together, we realized that in some cases we had perhaps a little too much overlap. One of the interesting things that we learned with Sandy is that historically, when you look at it, AXIS has been a commercial writer. So we had both commercial risks on the insurance side and the reinsurance side. When you have a Sandy loss, which is mostly a commercial loss, they tend to aggregate. We are spending more time right now putting more personal line exposures in our reinsurance book. With regard to staffing, as I said to you before, we are focusing on our staffing and our skill sets. As I mentioned, we brought on very strong new talent in 2012.
What we are going to be doing over the next couple of years is spending more time on developing our own staff. When you're starting a company, you're bringing in producers, you're bringing good people, and it's a way to accelerate the growth initially. But now that we have 1,100 people in the company, we're going to be spending a lot more time developing our next generation of leaders. That will make sure that those leaders have an approach to risk, an approach to underwriting, and cultural values that are more consistent with the way we run our business. The reason that's important is when you've got 1,100 people in 30 offices in five continents, you want to make sure that all of these individuals approach the business in the same way. We will be investing in that.
Ultimately, what we want to do, what this management team wants to do is to make sure that whoever you are, whether you're an employee, a producer, or shareholder, that when we mention the word AXIS, that you've got a very clear understanding of what it is we want to do. We want you to think of us as an organization with a clear strategy and direction, a growing global presence, an expanding portfolio of attractive risks, expert service-oriented team that delivers superior results, and attractive returns for our shareholders. That's what we're working towards. Thank you for your attention. At this point in time, my colleagues and I would be happy to answer your questions.
I'll throw out a couple, Albert. The first is you talked about some of these new initiatives which will clearly drive some premium growth. At the same time, you're investing in people and teams.
Overall, do you think you'll be able to manage the expense ratio to a flat comparison, or should it creep up a little bit?
That's a very good question. I mentioned two things. One is the fact that we want to improve our operational effectiveness. As we expand our investment in new teams and new markets, we're also trying to make sure that we create that capacity for new expense by finding efficiencies where we're spending money right now. Joseph Henry is currently leading a project to look at our expenses and expense ratio to ensure that we create that capacity. I will say that our goal in 2013 and going forward is to ensure that our expense ratio, our G&A ratio, does not increase year-over-year over what it was in 2012. Now, in 2012, our expense ratio did include about a point on the executive transition charges. When you adjust for that, we end up with an expense ratio of low 15%. That is our target.
We want to make sure that we keep it at that level or better.
Jay, I'll just add to that on the technology side, Jack and his team in particular, Jay to a certain extent as well, we've been investing pretty heavily in technology to improve our operational excellence. It's not very apparent in our expense ratio because it hasn't been growing very rapidly. I just want to let you know that as well as trying to keep a lid on expenses, we are making significant investments to improve our operational effectiveness.
Thanks, Joe. The other question I had, unrelated. On the ag side, the crop business, what are you seeing from a demand standpoint, whether it's demand from farmers or from buying insurance or insurance companies buying reinsurance? After this drought, you figure there might be a change.
Absolutely, there is a change. I'm not sure there's much of a change from farmers. They've always been big users of the program. After all, that's one of the great benefits in the U.S. I mean, the farmer community does get a significant benefit here. I think what we are finding out is a greater recognition by all parties involved in agri-business that there's some real volatility and some real risk here, and everybody wants to get smarter about managing risk. That includes the underlying primaries, and there's clearly going to be, and there is more reinsurance purchasing from the primaries in 2013 than there was in 2012, and you've seen some growth numbers being reported by people who are in the reinsurance world. Also increasing awareness in the rest of the world for that kind of security.
Another example, Saskatchewan just announced recently that they're going to be buying for the first time reinsurance protection to back up the government program. You're seeing large traders, wholesalers, economic entities looking for protection. You're looking government programs looking for protection. The demand growth in crop and agri-business is in fact increasing.
Albert, you mentioned the favorable pricing environment. Could you just remind us of the market dynamics that have put us where we are in terms of being a favorable price environment, but more importantly, as you look at what you're thinking about and your competitors are thinking about the durability of that pricing environment?
That's fair. Historically, people have always said you can't get pricing increases until you've had a large CAT and a large capital depleting event. Whereas historically that's been true, if you look at it, the insurance industry as a whole is having a hard time earning its cost of capital. I think finally you're getting that kind of just pressure of just getting beat up and saying, we need to have more profits. You're looking at your investment income going down, notwithstanding the fact that investment balances are going up. How are we going to manage that? What you're seeing, I think, is just ultimately fatigue that we need to generate an adequate return. It is not fun trading at less than book value. It's just not.
We need to do something to demonstrate to ourselves, to our boards, to our shareholders, that in fact we have a business model that can deliver in excess of our cost of capital. That's why I think that it will continue. We all know there's a substantial capacity, but we have to deliver. We're not expecting the kind of spikes we've had in the past. At least for the moment, we believe that through 2013, we will continue to see improvement. Jack tells me Jack is obviously very close to the market, maybe a little slower in property, but still positive, but accelerating in liability?
Absolutely. Very much so. Particularly in the longer tail liability lines the excess casualty primary GL. The professional lines are slower and steadier for our portfolio. Property had some driven by the international CATs in 2011, and through 2012 was particularly strong, obviously. Started to level off a bit, but that leveling off has ceased following Sandy. We continue to see that improve too.
That's all the time we have. Join me in thanking Albert and his team.