Net profit rose to $2.33 billion from $1.84 billion. The rise was helped by the company recognising tax benefits made available when it received a US government bailout in 2008.
The company, which is still 61% owned by the US Treasury, had a tax expense of $331 million for the quarter.
Earlier this year, a special tax provision granted to AIG during the financial crisis was put under investigation.
In March, four former members of the Congressional Oversight Panel for the Troubled Asset Relief Program released a statement condemning a tax-related exemption given to AIG
The exemption allowed AIG and several other struggling companies to apply their net operating losses against future tax bills, despite a rule that eliminates them when a company is acquired or files for bankruptcy.
“AIG gambled recklessly on mortgage-backed securities and lost,” Elizabeth Warren, ex-chair of the panel, told the New York Times in March. “When the government bailed out AIG, it should not have allowed the failed insurance giant to duck taxes for years to come. That kind of bonus wasn’t necessary to protect the economy. It also gives AIG a leg up against its competitors at a time when everyone should have to play by the same rules – especially when it comes to paying taxes.”