Operator
[Operator Instructions] Our first question comes from Alex Scott with Barclays.
Taylor Scott
First one I had for you is on the leverage in the business. I mean when I look at AIG, I mean, you guys have done so much on the combined ratio and expenses, and you really look similar to peers on a lot of those metrics now, but the ROE is still lower than peers, mostly because of, I think, the premium leverage in the business. And so I just wanted to get your feel on how do you think about the excess capital that you have? Is there anything structural that prevents that from moving up more significantly? And how do you manage that through a soft market where it's a little bit more difficult to grow?
Eric Andersen
Thanks, Alex. There's a lot of questions in there. Let me start by saying just from an excess capital standpoint first. As an insurance company, we're pretty fortunate to have a rock-solid balance sheet. And as I think I said in the prepared remarks, we see a lot of opportunities to grow the business. And so our preference is to focus on growing into the capital base. But at the same time, I think we've demonstrated that we're big believers in returning capital through buybacks and dividends, which is a focus for us as well. I think you also saw that we've entered into select targeted transactions over the last 12 to 24 months that do contribute to premium volume and capabilities, which has been additive to the portfolio, and we're going to continue to look for things that fit that same category. But ultimately, we're well capitalized. We have strong liquidity. We have debt capacity, 3 important strengths that drive and are so important for us as a global insurer. And ultimately, to get to the high end of the ROE range that we talked about at Investor Day, it requires strong execution around underwriting, around expense discipline, investment income, capital management. We're focused hard on the underwriting profitability. We're focused hard on driving higher yields and then talking through how we actually support the balance sheet with the financial flexibility. So we feel pretty good about where we are, and we see a lot of opportunities in the future.
Operator
Our next question comes from Meyer Shields with KBW.
Meyer Shields
We've heard a number of executives talk about how social inflation in the U.S. may be leveling off or moderating a little bit. And I'm wondering, setting aside what you're booking and what you're embedding in pricing, what are you monitoring? And what are you seeing in terms of the pace of social inflation?
Eric Andersen
Meyer, thanks for the question. Listen, I think there's been a lot of talk around social inflation and litigation funding and all the aspects that have been driving everything from nuclear verdicts to just overall cost increases. I would say there's been some efforts in some states, whether it was North Carolina around litigation funding, New York on auto reform, all good green shoots. But ultimately, we haven't seen anything that says that it's moderating at this point, and we're certainly not building that into our pricing at this stage.
Meyer Shields
Okay. Perfect. And then a quick question for Keith. You talked about getting accident year '23 excess casualty sort of in line with subsequent years. And I understand why that wouldn't have an impact on any need for changing this year's loss picks. But what about accident year '22, '21? Is there significant IBNR there that would also need to be reviewed?
Eric Andersen
Meyer, maybe -- this is Eric. Let me just jump in, and I just want to provide 1 or 2 comments before Keith answers that question, which he will do well. I think he laid out in the prepared remarks sort of the factors around our reserving process, right, whether it was the limit management strategy, the re-underwriting, the reinsurance program, the reserving philosophy. And I personally spent a lot of time in the last couple of months going through with the team our reserving process, how we build the loss picks at a granular level, what the actuarial claims and underwriting triangulation does to get ahead of trends, the robust governance over it. So I feel really good where we are. But with that, Keith, why don't you add a little bit of color?
Keith Walsh
Yes. Thanks a lot, Eric. Meyer, as we look at our reserves there's ranges of estimates that are informed by different methods and assumptions. Eric commented on our process, so I won't repeat that. What I'll tell you is we made the comment predominantly in accident years '16 and '23, and that's where we saw the impact. But our experience, specifically on '23 is broadly in line with our expectations, and we continue to be in our expected range of outcomes, and that includes the more recent accident years as well. For 2023 specifically, we took the opportunity to move up in the current range. And that now brings us to a similar level to years '24 and '25. We're not seeing material or any deterioration, any real deterioration in '23 and no change in frequency or severity. We just felt it was simply prudent to move up in that range to be more consistent.
Operator
Our next question comes from Brian Meredith with UBS.
Brian Meredith
So 2 quick ones. First, I guess, for Keith, I'm just curious, Keith, you talked about how the acquisition ratio is kind of trending up a little bit because of mix shift. What is the impact that's having on your core loss ratios? And do you expect that to continue to kind of trend upwards here as perhaps you shift out of property and more into the casualty lines?
Eric Andersen
Listen, let me just open with that for a second because I do think it's important to just lay a few comments on top of it. Certainly, as rates moderate across the portfolio, you're going to see some pressure on the loss ratios. It's something we watch. We talked -- I think, in the prepared remarks, we mentioned what we've been doing in the E&S portfolio. We mentioned that we're talking -- we're looking at the energy business just to make sure that we're getting the right price for the risk-adjusted return that we're looking for. So business mix is going to be an important part of this. But I think on the acquisition ratio, I think the point we're trying to make here is that there are certain portfolios and certain transactions that may add to the acquisition cost, but ultimately, you provide less expenses to that portfolio. And so it improves the overall expense ratios, but it just comes in different buckets. And so I think we're trying to do is get you to look across the whole in its entirety versus the individual pieces. But with that, Keith, anything you would add?
Keith Walsh
Yes. Thanks, Eric. And just specifically on the loss ratio piece, mix is a big part of it, Brian, as you mentioned, and we've been talking about this for several quarters as we have pulled back or reduced in the property market. And remember, second quarter is a very large quarter, and we've gotten larger in casualty, you tend to get that mix shift and you get the loss ratio tick up a bit. More broadly speaking, you've seen this in the commercial lines book for 5 of the last 6 quarters, right, as we've moved forward. I'll just make a broader comment, and this goes back to what we've been saying for the last couple of years. Our accident year combined ratio adjusted margins have largely held. And that's a function of some of the pressures you're seeing in commercial lines loss ratios being offset by the really strong work that was done on the personal insurance side as well as the progress we continue to make on the expense ratio. So we feel really good about where we're at with our overall margins.
Brian Meredith
That makes a lot of sense. And then, Eric, just curious, thanks for all the commentary on kind of growth and how you're thinking about growing here. But how do you think about the pricing environment in your context of what the growth outlook is here and how you're thinking about growth via organic or inorganic? Are you thinking we're going to see consistent kind of pricing out like we are today, things get more competitive, do you think maybe look more towards inorganic versus organic? Maybe give us a little color around that.
Eric Andersen
Sure. It's a great question. It's something we talk a lot about. Listen, from a component of growth standpoint, we did 9% in the quarter, and we did 13% in the first half. And when we talk about the strategic transactions versus what we're doing organically, it's getting more difficult to distinguish between the 2 when you think about our underwriters and the way they are approaching each client and each program, whether it's an Everest renewal placement on top of an AIG placement, certainly, how we work that down into a structure for a client is important. So we take a client view as opposed to a transaction view. But we do manage it internally just to make sure we've got eyes on it, as you would expect. So for us, it's really about can we get access to the right products at the right pricing with the right terms and conditions to be able to sort of do that with our clients. But as I said in the prepared remarks, we're not opposed to continuing to look for strategic opportunities where we can deploy capital and get the right return for ourselves, whether that's in the U.S., whether that's around the world, we're going to continue to do that because I do think it allows us to continue to broaden our relationships with our clients. It often brings new talent and new skill sets to the organization. And so it's something you're going to see us continue to do.
Operator
Our next question comes from Michael Zaremski with
Michael Zaremski
Back to the topic of growth and relative to the kind of the mid, maybe upper end range of the ROE goals that you set out at the Investor Day last year, which Eric, you mentioned on the call this morning. How big of a factor is the high single-digit to low double-digit premium growth to kind of get to that range in terms of operating leverage ultimately?
Eric Andersen
So listen, let me start with a couple of opening points, and then I'm going to ask Jon Hancock to jump in as well to get his perspective. But as I said a few minutes ago, I think we're having a great growth year. I mean 13% in the first half, I think, is an excellent result. But we are at a point in the cycle where cycle management becomes a primary tool to make sure that we maintain a disciplined approach to the market. We do think there's attractive organic opportunities in the market, and we're going to continue to be selective to be able to position ourselves across all 3 of our segments. And maybe if you think about the strategic transactions we did, we knew going into this year that growth was likely going to be more challenging. And so converting them has been a big priority for the work that the team has been doing over the last 6 to 12 months as those things have come online. But listen, the property market continues to be under broader pressure. We talk about the E&S market a lot, but certainly, internationally, which doesn't have as much volatility, but certainly seems to want to mimic the U.S. market more and more as the days go by. But -- and casualty remains pretty attractive. We're seeing the rate increases in the book that we need and to be able to hit our risk-adjusted returns. And we like the international portfolio. So overall, we actually see some great opportunities. But Jon, why don't you chime in with your thoughts?
Jon Hancock
Okay. Yes. Thanks. I won't repeat what you and Keith have already said. But I think it's worth just repeating, we take a prudent approach. We know where we are in the cycle. And this isn't the first time any of us have experienced a market cycle, isn't it? We've been expecting it. We've been preparing for it, and we're managing it for sure. And Eric said a couple of times, we have a really diverse portfolio across the globe, and we're seeing different market dynamics and different risk attributes actually in different parts of the world. So yes, it's a competitive market for sure, but lots of good growth opportunities. So without repeating what's been said, I'll give you a couple of examples, I think, which are relevant. I mean Global Specialty, which we talk about a lot. I mean, we're market leaders in all of those segments. And we've seen several years of significant rate increase and strong profit. And that leadership means we can go after the business we want and at the same time, remain disciplined about obtaining the right risk-adjusted returns to hit those targets we talk about. And we expect to continue to grow. But I'd also call out energy within that Global Specialty portfolio, strategically important to us. It's one of the strongest long-term underwriting franchises we've got. But right now, we're not happy with what we see going on in the market in terms of pricing, which we don't believe is reflective of the loss activity or the underlying risks actually. But we're not an index step to the market. We've got a great leadership team, huge amounts of management data. So we're taking the right actions all the way through. But we're watching it carefully. And in the meantime, we pick our way through the best opportunities. And I'll just give one more, I'll flip to probably the opposite end of the risk spectrum, actually. And we've talked about it a couple of times on the call. We talk about accident health a lot. So in many ways, it is the opposite of Global Specialty, high-volume and low limit. We're recognized as a leader in A&H. We've been starting to show some really solid growth, which we expect to continue. We've got a global footprint in A&H, and we see good near- and long-term opportunities in a lot of the countries we operate. We've got a great pipeline already delivering some notable wins, and we expect to see more. So 2 micro examples across a broad portfolio.
Eric Andersen
Thanks, Jon. And maybe just to put a bow on that topic. It does in this market and with our diversified portfolio, it gives us a chance to play both offense and defense under different market environments. But -- and we're focused on converting these advantages, but profitability is always the North Star, and we want to make sure as we grow, we're growing in a smart, prudent way.
Michael Zaremski
Got it. That's helpful. And just quickly a follow-up, which a question on technology, but it dovetails on the growth conversation again. At the Investor Day and subsequently, you guys have discussed some kind of exciting initiatives to -- I guess I'd phrase it as get more business through the pipes in terms of being able to respond to submissions, et cetera. Is -- maybe you can kind of update us of is that having a noticeable difference yet? Or is that still kind of more of a work in progress?
Eric Andersen
No, that's a great question. And I would say maybe just from a little bit of personal perspective on it, and then we'll go into what AIG has been doing, which I do think is industry-leading and very exciting for our company. But just from my background, an area of focus over many years has been working on the end-to-end insurance process, identifying ways to make it more efficient, more scalable, more effective, everything from how do we get more business to how do we process it more efficiently and how do we make sure we're delivering a better colleague experience and a better client experience, which are really a term you're going to hear us anchor to over in the future, making sure that all the investments that we're making really do improve our colleague experience and how they do their business, whether it's an underwriter, an underwriter assistant, a claims person, someone that works in one of our corporate functions. And then ultimately, they have to drive client outcomes, whether it's new business for us and new products for them, whether it's better claim service, whether it's speed of the business of insurance, whether it's invoices or policies or all those things. So really focused on anchoring to what makes it better for our colleagues first and then what makes it better for our clients. And I would say, over the last couple of months, I've been investing a lot of personal time in with our team, making sure that I'm up to speed with AIG strategy, whether it's the relationships we have with our great partners, but really more importantly, how are we rolling out AIG Assist Underwriting by AIG Assist and Claims by AIG Assist that we're actually -- as we've been talking about in prior quarters that we're actually getting it into the hands of our colleagues, and we're able to see advantages that grow from that investment. And I talked a little bit in the prepared remarks about the broker level insights. I could have talked about the speed and the number of submissions, which I think we've talked about in the past, which continues to happen for us. We're seeing more business. We're quoting more business, and we're able to actually get a better line of sight on consistency in the underwriting, speed in the process. And we feel really good about that, and we're going to continue to drive that forward. The broker level insight, it was -- we wanted to point out is something a little bit different. And that what we're learning as we go through the volume and in a way where our AI strategy gives us better insight is as we're dealing with our distribution partners, we're able to learn pretty quickly where we're seeing better business, from an office -- from a firm, from an office down to a broker, which gives us the opportunity to pivot and actually spend the right resources where we are getting the best outcomes. And so we're at early days of that, and it was sort of a derivative outcome to all the work we've been doing around Underwriting by AIG Assist. But as we roll that through the organization, the ability to use our client distribution teams and our broker distribution teams to focus in on where we see our best opportunities, we think we'll make it more efficient. It may not be more submissions, but it might be better submissions, submissions that match our appetite with partners and clients that want to use our organization to handle their risk needs. So early days on that, but an exciting new piece for us and really just underscores making these kind of investments as you innovate and lead in this space does provide benefits that we didn't necessarily see going into this. But ultimately, it's something as we connect our sort of front-end facing part of the organization, really starting to work that angle pretty hard.
Operator
Our next question comes from Rowland Mayor with RBC Capital Markets.
Rowland Mayor
I was wondering if you could size the premium contribution from the Convex quota share in the quarter. I think it would be helpful since there's built-in growth from that over the next few years.
Eric Andersen
Listen, I would say when you look at the 9% in the second quarter and the 13%, we've talked about it coming in a couple of different buckets. Certainly, the organic number, somewhere I would call low to mid-single digits. And then the other -- but honestly, as I said before, with the Everest transaction, it gets a little difficult to track as we start to go client by client where we have a shared relationship. And so the rest of it fills in with some of the other transactions. So we haven't really broken out the pieces. But just to give you some sense, we talked a little bit about the reinsurance tailwind in the first quarter. That's largely dissipated in the second. And the rest of the transactions kind of fill in the rest of the percentages.
Rowland Mayor
And then maybe going a bit of a different direction. Corporate debt issuance to support AI build-out has been a growing topic of interest. I'm just wondering if in your fixed income portfolio, you're starting to have significant allocations to AI-related corporate debt.
Eric Andersen
Yes, go ahead, Keith.
Keith Walsh
Yes, Rowland, thanks. We don't have significant allocations to AI-specific related debt. I mean I did mention on the last quarter call a bit about within private credit, direct software exposure, for example, is 16 basis points of the portfolio. So I would say any of these allocations are pretty immaterial at this point.
Operator
Our next question comes from Pablo Singzon with JPMorgan.
Pablo Singzon
The Global Personal Lines business combined ratio has been running close or better to your Investor Day target for the past several quarters. So how much of that, in your view, is the result of a generally favorable environment for personal lines versus changes that you have put through and perhaps your mix as well, right? Because we recognize that there are other lines in there aside from homeowners and personal auto. So any perspective would be helpful.
Eric Andersen
Sure. Listen, I think it's always hard to put those answers in specific buckets because they all have an impact on it, but we're excited about what's happening with the Global Personal business. We highlighted in the prepared remarks, the growth that we're seeing, 7% NPW growth, 220 basis point improvement in the expense ratio, 490 basis points improvement in the combined ratio. So all really positive and positive direction. We're excited about the business in general. We see it as an opportunity for us to really expand and connect the firm globally in areas that are pretty exciting. But the high net worth profitability, it was premium growth. It was underwriting actions. It was some reinsurance savings, lower acquisition costs, running the business better around operating expenses. And then Jon talked about the A&H business. We're starting to see some good growth with a building pipeline, and we're investing behind that leadership team. We feel like they are really world-class and have really got the sort of the business line growing for us. So it has some cat to it, as we all know, especially the high net worth business, but -- and we've been a little bit fortunate. But ultimately, I think the fundamentals of the business are very solid, and we continue to invest in it.
Pablo Singzon
And then second, just on expenses. You had mentioned you're on track to reach your 30% target. The expense ratio ticked up sequentially, but I think that reflects the seasonality in your reporting, right? So maybe if you could talk about your expectations for the second half and more broadly, how you think expense management and perhaps newer tools like AI will help you in subsequent years?
Eric Andersen
Great. So maybe I'll take it first and then maybe I'll turn it to Keith for some additional -- some color. But as we said in the prepared remarks, we remain on track to achieve the sub-30% expense ratio for full year '27. That's been something that the organization has been on a journey on even before the Investor Day commitment, but obviously, it's a focus for us. And why are we confident about it? We are really disciplined on expenses, and we've made tremendous progress. The growth that we're achieving in '26 is going to bring some strong operating leverage. And I would just say before Keith probably says it 3 more times, you can't really look at it quarter-to-quarter. It does have fluctuations. But look at it over a rolling 12 months. But Keith, why don't you go from here?
Keith Walsh
Yes, Pablo, thanks for the question, and I appreciate it could sometimes be difficult on the outside the quarter-to-quarter movements. And that's why we always stress looking at it over the course of a year or a longer stretch of time. And as Eric said, we continue to make progress. Just a couple of points and not to belabor, but I'll say it again, 3 points. Point one, on a rolling 4 quarters, which I think is the best way to look at it to see the trend, we're at 30.7%. And just keep in context, we ended 2025 at 31.1%, right? So we continue to make progress on that metric. Point two, premium leverage, right? As Eric has stated, the written premium is quite strong this year. And as that earns in, that will continue to give us leverage on this ratio as we move forward as our net premiums earned grows. And then point three, expense discipline. Another way to look at it is looking at the nominal numbers. I think that's really important to give it another view. And what I do is you look at the GOE and the other expenses in the corporate segment, add them together. And if you look at for the second quarter and the first half, those expenses were flat year-over-year FX adjusted against 5% premium growth. So it shows the expense discipline and the leverage that we're getting and why we have confidence going forward, we'll continue to get that.
Eric Andersen
And maybe one more comment. I think you also asked about the AI expense and whether we'll see that as a help. Ultimately, how we become more efficient, technology will play a big role in it. But if the underlying question was really about headcount, the strategy for us on the deployment of AI is not to have less colleagues, but to have our colleagues become more efficient and work with more clients. And so that's really where we're going with the investments, and that's how we're looking at it. And I think that's why we went hard at the center of the business. When we went to underwriting, we went to claims, that's what we do, and we feel really strongly that the rollout of our AI strategy will help us be better in both. Certainly, with the underwriting side of it, you see more, you get more consistent, you learn distribution things as we were talking about. And then on claims, our ability to interact with our clients faster, more efficiently in a way that helps them solve either get their claim paid quickly or at least to respond to them in a way that they feel like they're being cared for, I think, helps us build brand and helps us build relationships that ultimately help us drive more business and help us hold the business that we have.
Operator
Our next question comes from Elyse Greenspan with Wells Fargo.
Elyse Greenspan
My first question, I don't think you guys updated -- gave an update on the premium growth guide, right, which was low to mid-teens for the year. It does sound like maybe a bit more cautious on property that we've heard from others. So do you think you're at the low end or maybe a bit below that as we think about potential growth in the second half?
Eric Andersen
Listen, I think it's a marketplace right now, right? And as we look into the second half, we're pretty happy with the 13% through the first half and 9% in the quarter. But ultimately, what we've been trying to communicate is that we're not going to chase growth blindly that we want to make sure we maintain our underwriting standards and we maintain the discipline because we want to be a profitable, well-run organization over a long period of time. So we're going to react to the market cycle as it is. That said, we do see opportunities for growth, and we're pushing really hard in that space to make sure that we are taking advantage of every opportunity that we have. It's still a little early in the year. And so right now, we feel really good about where we are.
Elyse Greenspan
And then my second question, one target you guys didn't address today, right, was the leverage target, which is -- had been 15% to 20%. Obviously, that was taken down through the years, and that's lower than what we typically see from some P&C companies. So is there thoughts about potentially bringing that up or changing that target at some point as a way to free up capital, whether for growth, M&A or incremental capital management?
Keith Walsh
Elyse, it's Keith. We haven't given -- we haven't reiterated that 15% to 20% in quite some time. Obviously, we're at 17.6%. We're within that range. But we run with a conservative leverage in the company, and we have a lot of dry powder, and we feel really good about where we're at. And so we have a eurobond that will be coming -- get refinanced later in the year that will be due early next year. But at this point in time, we like our leverage situation where it's at.
Eric Andersen
So thank you, everybody, for joining the call today. I just want to express my sincere appreciation to our colleagues around the world as well as our clients and partners. I also want to give a special thank you, if I can, to Peter Zaffino. His partnership throughout this transition has really been fantastic. His guidance has been great. And I think the overall organization has benefited from it, and I certainly have as well. So I'm looking forward to building on the foundation in the months ahead and sharing our continued progress, and we'll talk next time. Thank you very much.
