And following that, I will provide an update on the progress we're making on AIG 200 and the operational separation of Life and Retirement from AIG.
Life and Retirement's adjusted pre-tax income increased 26% year over year and the business delivered a return on adjusted segment common equity of 16.4%.
We continue to advance the AIG 200 with transformation remaining on track to deliver $1 billion in run rate savings across our company by the end of 2022 against a cost to achieve of $1.3 billion.
Net premiums written increased 24% year over year to $6.9 billion or approximately 20%, excluding foreign exchange.
Our Global Commercial net premiums written increased 13%, excluding foreign exchange, reflecting growth in areas with attractive risk-adjusted returns, improving renewal retentions and really more than that 25% increase in the new business compared to the prior-year quarter and overall rate increases of 13%.
North America Commercial net premiums written increased 15%, excluding foreign exchange, including our strong growth in Excess Casualty, Financial Lines, Retail Property, AIG Re and Lexington.
New business increased 25% from the prior year quarter, led by Financial Lines and Lexington wholesale.
Renewal retentions also improved in 300 basis points over this same period.
Net premiums written grew 10%, excluding foreign exchange, and primarily driven by Financial Lines across the U.K., EMEA and Asia Pacific, global specialty, particularly marine and energy, and Talbot, our Lloyd's syndicate.
New business increased 26% from the prior year period, led by Financial Lines, marine, energy and Talbot.
And renewal retentions increased by 500 basis points over this same period.
And in addition to strong retention, growth is being driven by exceptional new business, which in Global Commercial was $1 billion in the second quarter.
Momentum continued with overall Global Commercial rate increases of 13%.
North America Commercial rate have increased 13% with the most notable improvements in Excess Casualty, which was up 20%; Lexington Casualty, which was up 19%; and Lexington wholesale property, which was up 15%.
International Commercial rate also increased 13%, driven by Financial Lines, which was up 21%; property, which was up 18%; and energy, which was up 16%.
Across the global portfolio, the largest rate increases were in cyber, where rates were up almost 40% and the strongest rate increases in North America.
The General Insurance accident year combined ratio ex CAT improved for the 12th consecutive quarter coming in at 91.1%, an improvement of 380 basis points for the second quarter of 2020 and an improvement of 990 basis points from the second-quarter 2018.
This improvement was comprised of 160-basis-point improvement in accident year loss ratio ex CAT and a 220-basis-point improvement in our expense ratio at AIG 200 and the benefits of premium growth continued to contribute to profitability.
Global Commercial achieved an accident year combined ratio ex CAT of 89.3%, an improvement of 500 basis points year over year.
This is the best result Commercial has reported in the last 15 years.
In Personal Insurance, the accident year combined ratio ex CAT was 95.1%, a 70-basis-point improvement over the prior-year quarter.
And in the second quarter, we were very active in the market with 25 specific layers on a variety of treaties placed.
Lastly, on General Insurance, we remain confident we will achieve a sub-90% accident year combined ratio ex CAT by the end of 2022.
Based on the progress that I've now seen in our underwriting, the ongoing efforts in optimizing our portfolio, the terrific execution of AIG 200 and the significant momentum we've developed, I'm optimistic we'll get there sooner.
And as we move through second half of the year and get further into AIG 200 in separation execution, we will provide you further comments on our combined ratio expectations.
Net premiums written across all lines increased more than 30% of -- the second quarter compared to the prior-year period.
property CAT, we saw rate improvements across all U.S. property business sectors; increases range from the mid-single digits to upwards of 25%, and depending on geography and loss-affected accounts; in Florida, Validus Re net limits at June 2021 were reduced by more than 40% in coordination with AlphaCat.
Since the acquisition of Validus Re in 2018, we reduced the overall limit in Florida of more than 65% or approximately $400 million of annual limit, demonstrating that Validus Re's continued discipline and focus on volatility reduction.
Further, Florida-specific firms represent less than 2% of Validus Re's total premiums written.
And in addition to 2020 and through the second quarter of 2021, less than 25% of AIG Re's net premiums written came from property lines.
Building on our retrocessional purchase on 1-1 of worldwide aggregate protection, Validus Re secured further retrocessional protections in June.
Second-quarter 2021's new planned participant enrollments also increased 20% year over year, as demonstrated regularly in recent quarters.
Now let me turn to AIG 200 in our global multiyear effort to position AIG for the long term.
AIG 200 is continuing with a sense of urgency for all 10 of the operational programs deep into execution mode.
We're 18 months into this transformation and we have a clear execution path to $1 billion in run rate cost savings of $550 million already executed or contracted, $355 million of which has been recognized already to date in the income statement.
AIG 200 continues to build a strong foundation across the company and instill a culture of operational excellence.
Separation management office has identified day 1 requirements for Life and Retirement to become a stand-alone company and multiple work streams are underway.
With the speed with which our colleagues have moved -- would not have been possible without the foundational work that's been done as part of AIG 200.
And as I've discussed on prior calls, our IPO of up to 19.9% of Life and Retirement was our base case since we announced our intention to separate this business from AIG last October.
Following the 9.9% equity investment by Blackstone, this IPO will likely be the first in the quarter of 2022 event, subject to required regulatory approvals and market conditions.
Additionally, the gain on sale of Affordable Housing, coupled with other factors, provides us with great flexibility to sell beyond the 19.9% as we now expect to fully utilize our foreign tax credits in 2022.
Blackstone will acquire a 9.9% cornerstone equity stake in the holding company for AIG's Life and Retirement business for $2.2 billion in an all-cash transaction.
The purchase price is equivalent to a multiple of 1.1x target pro forma adjusted book value in $20.2 billion.
Life and Retirement will also enter into separately managed account agreements, or SMAs, with Blackstone -- whereby we at Blackstone will manage $50 billion of specific asset classes with that amount growing to $92.5 billion over a six-year period.
Lastly, and as I alluded to earlier, we sold some -- certain of Affordable Housing assets to Blackstone Real Estate Income Trust for $5.1 billion in an all-cash transaction, which is expected to close by year-end 2021.
Turning to capital management, we ended the second quarter with $7.2 billion of parent liquidity.
The net proceeds from the Blackstone transactions resulted in an additional liquidity of $6.2 billion to AIG by year-end 2021.
Through the remainder of this year, we plan to pay down the $2.5 billion AIG debt and buy back about -- at least $2 billion of the common stock.
For the second quarter of 2021, AIG reported adjusted pre-tax income, or APTI, of $1.7 billion and adjusted after-tax income of $1.3 billion.
We produced an annualized return on adjusted common equity of 10.5% for AIG, 12.3% for General Insurance and 16.4% for Life and Retirement.
The annualized return on adjusted tangible common equity was 11.6% to the quarter.
On a GAAP basis, AIG reported $91 million of net income with principal difference between GAAP and adjusted after-tax income of $1.3 billion being the accounting treatment of Fortitude, net investment income, and associated realized gains and losses.
The fee structure is 30 basis points on the initial $50 billion of AUM, increasing to 45 basis points for the annual new AUM of $8.5 billion, starting four quarters later as well as for the reinvested run-off AUM.
Therefore, fee should rise from 30 basis points initially toward 43 basis points by the end of the initial six-year contractor for Blackstone's share of the assets.
Before leaving the Blackstone transaction, I want to note that a GAAP loss on sale is anticipated with a 9.9% equity purchase by Blackstone as well as with subsequent IPO sell-downs due to the inclusion of OCI and GAAP book value.
As respects Affordable Housing, note that the $5.1 billion purchase price translates to an approximate $3 billion after-tax gain on sale, which will benefit book value and provides approximately $4 billion of cash to parent with the minority proportion held back in a regulated Life and Retirement entity to further strengthen an already historically strong RBC level.
Moving to General Insurance, second-quarter adjusted pre-tax income was $1.2 billion, up $1 billion even year over year, primarily reflecting increased pre-tax underwriting income of over $800 million, along with $200 million and change of increased pre-tax net investment income, driven primarily by equity returns.
Catastrophe losses of $118 million were significantly lower this quarter, compared to $674 million in the prior-year quarter.
Prior-year development was $51 million favorable this quarter, compared to the favorable development of $74 million in the prior year quarter.
This included $58 million of net favorable development in North America and $7 million of net unfavorable development in International, both of which reflect some marginal changes in the underlying operations.
As usual, there is net favorable amortization from the adverse development cover, which amounted to $49 million this quarter.
The International Commercial segment has continued to improve profitability with 370 basis points improvement compared to the prior-year quarter.
And this level of Global Commercial improvement is also noteworthy Global Commercial made of 71% of worldwide net premiums written through the first half of 2021.
Global Personal Lines net premiums written grew by approximately 45% or 41% on a constant dollar basis, aided by the Syndicate 2019 comparison.
Our outlook for net premiums written for the next six months in North America Personal Insurance is between the $450 million and $500 million per quarter.
Based on the Consumer Price Index and the Producer Price Index, headline inflation that indicates an annualized runrate of about 5.5% to 7.5%, which has accelerated in March.
Some components of the indices have become worrisome, such as used cars and trucks being up about 45% and energy commodities being north of 40%.
But medical care services, whose impact now stretches across most casualty, auto, workers' compensation and excess placements, although higher, are much more tame than the headline inflation that would indicate with physician services up about 4% recently and hospital services up about 2.5%.
For example, our Excess Casualty average attachment points for national and corporate U.S. accounts have also increased approximately 3.5 times and 5.5 times, respectively, since 2018.
view toward the total inflation rate of 4% to 5% is arguably reasonable for the near to medium term.
We estimate our exposure to the population is approximately $65 million to $75 million per 100,000 population deaths.
Within Individual Retirement, excluding the Retail Mutual Fund business, net flows were positive for the quarter and favorable by over $1.2 billion when compared within second-quarter 2020, led by the Index Annuities rebounding to be higher by approximately $700 million with Variable Annuity net flow of about $365 million stronger year over year.
The adjusted pre-tax loss was $610 million, inclusive of $94 million from consolidation and elimination entries, which principally reflect adjustments offsetting investment returns in the subsidiaries, which are in alignment at Other Operations.
Before consolidations and eliminations, the adjusted pre-tax loss was $516 million, $184 million worse than the second quarter of 2020.
But that quarter included two months of Fortitude Re results of $96 million.
And in addition, during the second quarter of 2021, we also increased prior-year legacy loss reserves by a net $65 million that's driven mostly by Blackboard exposures.
Shifting to investments, our overall net investment income on APTI basis was $3.2 billion.
That's virtually flat from the second quarter of 2020 but again, adjusting the second quarter of 2020 for Fortitude net investment income of over that two-month period, this quarter's net investment income was $362 million higher than the prior year, reflecting our strong private equity returns at an annualized 27% return rate for the quarter.
And hedge fund results at a 21% annualized return rate for the quarter, along with stable interest and dividend income.
Turning to the balance sheet, at June 30th, book value per common share was $76.73, up 7% from one year ago.
Adjusted book value per common share was $60.07 per share, up 7.5% from one year ago, driven primarily by strong operating performance.
Adjusted tangible book value per common share was $54.24, up 8.1% from a year ago.
As Peter noted, at quarter end, AIG parent liquidity was $7.2 billion.
Treasury in connection with some certain tax settlement agreements emanating from pre-2007 as well as completed debt tenders for an aggregate purchase price of $359 million.
Our debt leverage at June 30 was 27% even, down 140 basis points from the end of 2020 and down 360 basis points from June 30th of one year ago.
pool fleet risk-based capital ratio for the second quarter to be between 460% and 470% and Life and Retirement is estimated to be between 440% and 450%, both in -- above the target range.
As of June 30, that portion of the DTA totaled $6.3 billion and is available to offset up to $30 billion of taxable income.
So upon tax deconsolidation, what we'll see is the ability to utilize up to 35% of Life Insurance company income against NOLs or any remaining FTCs.

Summary:
Net premiums written increased 24% year over year to $6.9 billion or approximately 20%, excluding foreign exchange.
The General Insurance accident year combined ratio ex CAT improved for the 12th consecutive quarter coming in at 91.1%, an improvement of 380 basis points for the second quarter of 2020 and an improvement of 990 basis points from the second-quarter 2018.
Through the remainder of this year, we plan to pay down the $2.5 billion AIG debt and buy back about -- at least $2 billion of the common stock.
Turning to the balance sheet, at June 30th, book value per common share was $76.73, up 7% from one year ago.
Adjusted book value per common share was $60.07 per share, up 7.5% from one year ago, driven primarily by strong operating performance.