Insurer American International Group on Thursday raised its dividend and announced more share buybacks as its fourth-quarter earnings beat expectations, swinging to a profit compared with a year-earlier loss.

The company also said it expects to reduce its global workforce in its property/casualty unit headed by Peter Hancock by about 3 percent, a move that analysts said could help the company improve its underwriting profitability.

The results take AIG one step further into a turnaround story since it was almost wiped out by its derivative bets during the financial crisis, something that had drawn heavy ire from both lawmakers and taxpayers. The company has repaid the $180 billion bailout it received in 2008.

“We have seen that the public negative sentiment is down dramatically,” Chief Executive Robert Benmosche said on CNBC.

The company on Thursday raised its dividend by 25 percent to 12.5 cents from 10 cents per share and also authorized a share buyback of up to another $1 billion.

“It certainly was a very strong quarter,” said Gloria Vogel, senior equity research analyst at Drexel Hamilton in New York.

Even so, she said, the company is still indicating that it is receiving less in premiums than it is paying out in claims. That could change going forward, Vogel said, in part on the workforce reduction that Benmosche detailed in a memo to employees, which was dated Thursday and obtained by Reuters.

“With results today, we announced a $265 million severance charge taken at the end of 2013, which we expect will reduce AIG’s global workforce by approximately 3 percent,” Benmosche wrote.

AIG shares rose 1.7 percent to $50.42 percent in extended trading.

Benmosche said also in the memo that while AIG has “positioned ourselves for continued growth and profitability,” there is a need for more change, including “to cultivate a culture where there is a clearer understanding of roles” and ensuring swift decision-making by the most qualified people.

“To accomplish this, in many parts of the organization, we will need to make some changes,” he said. “We know that this will mean some changes in roles and in reporting structure, and that some roles will have to be eliminated.”

PREMIUM PROFITABILITY COULD IMPROVE

For the fourth quarter, AIG reported net income of $1.98 billion, or $1.34 per share, compared with a loss of $3.96 billion, or $2.68 per share, a year earlier when the effects of superstorm Sandy were felt.

On an operating basis, the company earned $1.70 billion, or $1.15 per share. At the property/casualty, operating profit unit was $1.09 billion, compared with a loss of $944 million a year earlier.

Analysts on average had expected earnings of 96 cents per share, according to Thomson Reuters I/B/E/S.

In commercial underwriting, net premiums earned rose 5 percent to $5.294 billion from the year-ago quarter, and the combined ratio improved to 107.7 from 130.3.

In consumer underwriting, net premiums earned dipped 7 percent to $3.296 billion, but the combined ratio fell to 103.3 from 111.2 in the year-ago period.

Net premiums earned in the company’s property casualty unit were flat at $8.6 billion, while the combined ratio improved to 103.8 from 125.1 in the same quarter of 2012.

The combined ratios will improve, “but it’s not going to happen overnight,” Sandler O’Neill & Partners analyst Paul Newsome. “One of their biggest issues is their expense levels as opposed to the underwriting. I think that’s more controllable, but it’s not going to happen overnight.”

The company said the pre-tax severance charge of $265 million in the fourth quarter primarily related to AIG Property Casualty as part of efforts to lower expenses.

The year-earlier quarter included a net loss of $4.4 billion related to the sale of AIG’s aircraft leasing business and after-tax catastrophe losses of $1.3 billion from superstorm Sandy.

The company’s shares closed at $49.59 in regular trade on Thursday.