AIG says cost reduction and improved operating efficiencies are priorities this year after it reported a 35% drop in first-quarter profit following the loss of divested operations.

Although profits from the property and casualty (P&C) and life divisions grew, group profit fell to $US1.98 billion ($1.93 billion) from $3 billion ($2.9 billion), reflecting the absence of AIA Group and other sold assets.

After-tax P&C profit increased 52% to $US1.59 billion ($1.55 billion), while life and retirement profit was $US1.39 billion ($1.36 billion), up 6% on the previous corresponding period.

The P&C result reflects a better portfolio mix and pricing increases, AIG says. The division’s combined ratio was 97.3, compared with 102.1 in the first quarter of last year.

The group has narrowed its core businesses to insurance and retirement services and predicts further cost cuts from the leaner operation, President and CEO Robert Benmosche says.

“As a global company with half of our people outside the US, we are exploring the capabilities, expertise and opportunities where we have operations.”