AIG returned to profitability in the first quarter with a net income of $US1.19 billion ($1.61 billion), partly aided by a drive to cut expenses and raise efficiency.

It follows a $US183 million ($247.04 million) loss in the corresponding period last year.

“Our first-quarter results highlight the success of the actions we have taken to execute on our strategy, strengthen our balance sheet and improve earnings quality,” President and CEO Peter Hancock said.

Mr Hancock, who is running the group until a successor to him is selected, says operating results across AIG’s core commercial and consumer businesses improved “and we continued to return excess capital to shareholders”.

AIG cut general operating and other expenses by 18.6% to $US2.4 billion ($3.24 billion) in the March quarter, and it repurchased $US3.6 billion ($4.86 billion) of its shares under a capital efficiency drive.

Its commercial insurance business made a pre-tax operating income of $US849 million ($1.15 billion), up 28%, despite a 17% drop in net written premium to $US3.7 billion ($5 billion).

The combined operating ratio blew out by 4.5 percentage points to 102.2%.

Consumer insurance posted a 49% jump in pre-tax operating income to $US1.05 billion ($1.42 billion).