ILFC operating profit rose to $119 million from $117 million a year earlier. AIG said in September that it plans to sell more than 20 percent of the subsidiary in an initial public offering and divest most of the unit over time.
Operating income at AIG's mortgage insurer, United Guaranty, slipped 43 percent to $8 million. Mortgage insurers pay lenders when homeowners default and foreclosures fail to recoup costs.
So-called alternative investments generated income of $353 million, compared with a $665 million profit a year earlier. Income from private equity fell by more than half to $184 million. Hedge-fund income fell 23 percent to $169 million. Returns for hedge fund and private equity investments are reported on a one month and one quarter lag, according to the statement.
AIG had $18.6 billion in alternative funds at the end of the first quarter, compared with $18.2 billion on Dec. 31.
AIG has sold non-U.S. life insurance operations, a consumer lender and other businesses to raise funds to pay back the government. In the first quarter of 2011, the insurer incurred a $3.3 billion pretax charge in retiring a Fed credit line. At the same time, the Treasury got 92 percent of the company's common stock, after exchanging preferred shares. That holding has been cut through two share sales.