Giant US-based global insurer AIG’s profit fell 27% to $US1.61 billion ($1.72 billion) in the first quarter on increased catastrophe losses and lower insurance investment income.

Property and casualty pre-tax operating income dropped 26% to $US1.16 billion ($1.24 billion) after catastrophe losses grew to $US262 million ($281 million) from $US41 million ($44 million) in the corresponding period of last year.

The division’s combined operating ratio deteriorated to 101.2% from 97.3%.

“The decline in pre-tax operating income also reflected lower net investment income in the first quarter,” the company said.

Commercial insurance underwriting earnings fell 71% to $US113 million ($121 million), while consumer insurance underwriting posted a $US59 million ($63 million) loss compared with a $US55 million ($59 million) profit in the first quarter last year.

AIG President and CEO Robert Benmosche says the overall operating result is “solid” and the company continues to seek ways to simplify the organisation and improve performance.

“We remain diligently focused on increasing operational efficiency, managing our expenses and investing in technology,” he said.

AIG Life and Retirement division earnings increased to $US1.42 billion ($1.52 billion) in the quarter from $US1.39 billion ($1.49 billion).