American International Group (AIG) has reported an after-tax loss of $US3 billion ($2.9 billion) for the third quarter due to weak investment markets.

The company had made a $US114 million ($110 million) loss in the previous corresponding period. AIG’s pre-tax operating loss was $US4.1 billion ($3.9 billion), compared with the previous third-quarter $US2.5 billion ($2.4 billion) loss.

CEO Robert Benmosche says the result reflects equity market declines, widening credit spreads, declining interest rates and catastrophe losses. AIG’s aircraft-leasing subsidiary also took significant impairments.

Chartis reported catastrophe losses of $US574 million ($552 million) for the quarter, mostly from Hurricane Irene. Its combined ratio for the quarter was 106.4.

“Despite the difficult external environment, we are encouraged by the progress we’ve made and the underlying strength of our core insurance businesses,” Mr Benmosche said in a statement.

The company last week announced it has paid the US Treasury $US972 million ($948 million) owed from the bailout in 2008. The funds came from AIG’s sale of American Life Insurance Co to MetLife last year.

During the third quarter it repaid $US2.2 billion ($2.1 billion) from the sale of Taiwan’s Nan Shan Life.

AIG has made repayments of $US45 billion ($44 billion) this year, and Mr Benmosche says it is making steady progress “toward our goal of America’s taxpayers recouping their entire investment in AIG”.

The US Government owns around 77% of AIG and the group still owes $US68 billion ($66 billion) to the Treasury and Federal Reserve.