The earnings from group, the largest recipient of U.S. government aid during the financial crisis, were better than expectations.

Excluding special items, the profit was US$2.85 per share, compared with a market forecast of US$1.98 per share.

It was the second consecutive quarterly profit for American International Group after the prior quarter's earnings of US$1.8 billion.

“Our results reflect continued stabilization in performance and market trends,” said AIG president and chief executive Robert Benmosche.

“AIG employees are working to preserve the strength of our insurance businesses in a challenging market by working closely with our distribution partners, with third quarter 2009 showing signs of stabilization.”

AIG was the largest single recipient of U.S. bailouts with the government pumping more than US$170 billion into the firm to keep it afloat and taking a controlling stake in the group in the process.