AIG’s profits sank by almost a third in the first quarter as reserve releases failed to completely soften the blow from a $376mn catastrophe bill after mudslides in California, storms across the northeast of the US and an earthquake in Papua New Guinea.

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In addition to the group’s catastrophe bill, AIG also reported an additional $135mn of severe losses.

The losses contributed to to a contraction in AIG’s adjusted net income which fell from $1.4bn this time last year to $963mn in the first quarter of 2018.

The insurance giant revealed $108mn of reserve releases - an improvement on the $24mn charge AIG took this time last year - that failed to offset poor performance in the group’s insurance division, which fell to a loss.

The general insurance segment reported a combined ratio of 103.8 percent, a marked deterioration from the barely profitable 99.8 percent it reported for the first quarter of 2017.

AIG said that increased reinsurance spend had put pressure in the result, offsetting a “favorable change in the portfolio mix”.

Net written premiums dipped by 2 percent overall to $6.17bn as “strategic portfolio actions” in the group’s US property and casualty book delivered a 12 percent dent AIG’s domestic net premiums, which fell to $2.04bn.

That shakeup more than offset 4 percent premium growth in the group’s larger international book, which climbed to $4.13bn during the quarter.

The international division delivered a 98 percent combined ratio that was roughly flat compared to this time last year.

AIG president and CEO Brian Duperreault said: “In the first quarter we made progress towards delivering consistent results with net favorable reserve development, a stable general insurance accident year loss ratio, and solid life and retirement results.

“Our emphasis on fundamental underwriting practices, increasing accountability across our businesses, and disciplined decision making is taking hold,” he went on.

“In the quarter, we added world class talent across the organization, particularly in general insurance to position AIG for long-term profitable growth.”