* AIG raises quarterly dividend to 12.5 cents per share
* 4th-qtr operating earnings $1.7 bln, or $1.15 per share
* CEO Benmosche says in memo that job cuts expected
* Shares rise in after-hours trading
Feb 13 (Reuters) - Insurer American International Group Inc on Thursday raised its quarterly dividend by 25 percent and reported it swung to a profit in the fourth quarter, compared with a year-earlier loss, sending its shares up in after-market trading.
AIG raised its quarterly dividend to 12.5 cents per share from 10 cents and authorized a share buyback of up to another $1 billion.
The company, which was nearly wiped out by its derivative bets during the financial crisis, resumed paying dividends last year after it repaid the $180 billion taxpayer bailout it received in 2008.
AIG Chief Executive Robert Benmosche, commenting on a charge taken in the fourth quarter, said in a company memo on Thursday that the company expects to reduce its global workforce by about 3 percent. Reuters obtained a copy of the memo.
"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," he wrote.
AIG shares rose 1.7 percent to $50.42 percent in extended trading.
Benmosche said also said in the memo that while AIG has "positioned ourselves for continued growth and profitability," there is a need for more change, including "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."
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.
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.
On an operating basis, the company earned $1.70 billion, or $1.15 per share.
Analysts on average had expected earnings of 96 cents per share, according to Thomson Reuters I/B/E/S. It was not immediately clear if the reported figure was comparable.
The company's shares closed at $49.59 in regular trade on Thursday.