AIG has reported a better-than-expected second-quarter result, with net profit up 6% to $US1.9 billion ($2.49 billion) amid lower expenses and strong underwriting results.

The result arrests a downward trend in which the global insurer’s preceding three quarters were unprofitable.

AIG says its bottom line was affected by changes to net loss reserve discounts on workers’ compensation reserves of $US455 million ($597.59 million) after tax, and a decline in earnings from market-sensitive assets.

“Second-quarter results show strong improvement towards all the goals the board and I announced in January,” President and CEO Peter Hancock said.

“We have executed more quickly and smoothly than expected and our confidence in reaching our 2017 financial targets is high as our earnings become more sustainable.”

AIG’s combined operating ratio deteriorated 3.3 percentage points to 102.1%, while investment income fell 21% to $US891 million ($1.17 billion).

In the fourth quarter last year AIG streamlined its management structure, and it plans to return $US12 billion ($15.8 billion) in capital to shareholders by next year.

“I want to thank our employees for their hard work and client focus while embracing widespread change in our management structure, asset and liability mix and operating workflow,” Mr Hancock said.

“Together we are reshaping AIG, investing in talent and technology to become our clients’ most valued insurer.”