AIG says profit grew 12.5% to $US3.07 billion ($3.29 billion) in the second quarter amid a significant drop in catastrophe losses.

Outgoing President and CEO Robert Benmosche has described the result as “solid” and says it underscores a focus on improving core insurance businesses.

The group’s last non-core asset has now been sold, and Mr Benmosche’s successor Peter Hancock takes over on September 1.

The results also show AIG has agreed to pay $US960 million ($1.03 billion) to settle a securities class action, following mediation.

The action by buyers of AIG stock from 2006-08 alleged false and misleading statements were made to inflate the share price.

AIG’s property and casualty division increased operating profit by 25% to $US1.36 billion ($1.46 billion) in the second quarter, with catastrophe losses falling to $US139 million ($149.17 million) from $US316 million ($339.12 million) in the corresponding period last year.

Its combined operating ratio was 98.8%, compared with 102.6%.

The life and retirement business increased operating profit by 2.5% to $US1.18 billion ($1.27 billion).