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American International Group has swung back to the black in a much-needed boost for the US insurer, which is still looking for a new chief executive.

Lower expenses and higher investment income helped the group produce net income of $1.19bn in the first three months of 2017, compared with losses of $183m a year ago.

The stronger-than-expected earnings recovery pushed shares in AIG up 2.4 per cent in after-hours trading. Its shares have under-performed the S&P 500 Financials Index by 13 per cent in the past year.

AIG has yet to find a replacement for chief executive Peter Hancock, who said almost two months ago he was standing aside after acknowledging that investors were dissatisfied.

The New York-based group has been forced to book billions of dollars in losses as it has underestimated the scale of policyholder claims. Ultra-low interest rates and weak investment income have added to the pressure.

Mr Hancock, who is staying in the job until the board finds a successor, said the earnings published on Wednesday “highlight the success of the actions we have taken to execute on our strategy, strengthen our balance sheet, and improve earnings quality”.

After-tax operating earnings came in at $1.36 a share, higher than analysts’ forecast of $1.07. Operating expenses were 13 per cent lower at $2.2bn. The company disclosed plans for another $2.5bn in share repurchases, putting it closer to achieving a target of returning a total $25bn worth of capital to investors by the end of the year.

Yet the figures also show the challenges facing Mr Hancock’s replacement. AIG produced a return on equity of 6.3 per cent during the period, worse than both life and non-life peers. It was only the third quarter in six that AIG has posted a profit.

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