After-tax operating income was USD 1.4 billion, or USD 0.97 per diluted share, for the fourth quarter of 2014, compared to USD 1.7 billion, or USD 1.13 per diluted share, in the prior-year quarter. After-tax operating income for full year 2014 was USD 6.6 billion, or USD 4.58 per diluted share, compared to USD 6.7 billion, or USD 4.49 per diluted share, for full year 2013. Operating results in the fourth quarter of 2014 reflected a pre-tax reduction in workers' compensation discount of USD 568 million, as well as total adverse prior year reserve development, net of premium adjustments, of USD 297 million before taxes. In addition, the Life operating segment recorded a pre-tax charge of USD 104 million in the fourth quarter of 2014 to increase reserves for incurred but not reported death claims, which reflected continuing efforts to identify deceased policyholders where a valid death claim has not been filed, pursuant to the resolution of a multi-state audit and market conduct examination. These items are further discussed in the segment results that follow.
"Our fourth quarter results showed progress on expense control, ongoing investments in our businesses, and our commitment to balance sheet management," said Peter D. Hancock, AIG President and Chief Executive Officer. "AIG's diversified and balanced business mix allowed for stable total insurance profits. Our strong balance sheet and continued profitability contributed to positive capital management in the fourth quarter, in the form of common stock and debt repurchases. We continued to optimize our funding profile by replacing high-cost legacy debt with new issuances at lower interest rates. Book value per share excluding AOCI and DTA increased 12 percent compared to year-end 2013. Our continued focus on managing our balance sheet to reflect our improved risk profile, combined with continued insurance company dividends, has contributed to the Board's approval of an additional USD 2.5 billion share buyback authorization.
"Looking back on 2014, it was a year of transition and transformation, as we took important steps toward our goal of becoming the world's most valued insurer," Mr. Hancock continued. "Our focus on value benefits our customers and our shareholders, and leverages our global scale to achieve the right balance between growth, profitability, and risk. We began several value-based initiatives in 2014 and will continue these efforts in 2015. We remain committed to streamlining our operations and reducing our cost structure. Beginning this quarter, we are providing more information and detail in our disclosures on expenses and investments, which we'll discuss further on tomorrow's earnings call.
"As of this quarter, our businesses are now reported in two segments: Commercial Insurance and Consumer Insurance," Mr. Hancock said. "This segmentation reinforces our focus on the ultimate client group being served, not the product being delivered, and we've made acquisitions and investments along these lines. We acquired Ageas Protect late last year and agreed to acquire Laya Healthcare last month. During 2014, we made substantial progress on the merger integration of Fuji Fire and Marine and AIU in Japan; there is still work to be done and the integration remains on track. We have invested in risk engineering capabilities that deliver greater value to our customers, and we have implemented our fully integrated OneClaim system in 20 countries, which is used by 6,500 examiners across our Consumer and Commercial segments. We are committed to improving our technology infrastructure to better serve our customers, as well as providing holistic insurance solutions that create value today and encourage confidence in the future."
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AIG reports fourth quarter 2014 net income of USD 655 million and diluted earnings per share of USD 0.46