On a normalized basis, which excludes some catastrophe losses and other one-time events, the ROE was 7.1 percent. Before his firm got a seat on AIG’s board, Icahn mocked Hancock for being unable to reach 10 percent.

AIG spent about $2.3 billion in buybacks during the period and another $946 million since then, according to the statement.

For the commercial insurance unit led by Rob Schimek, pretax operating income rose 23 percent to $729 million as investment results improved. The combined ratio worsened to 105.3 from 102.3, meaning the insurer spent about 105 cents on claims and expenses for every premium dollar earned. Catastrophe costs almost tripled to $253 million. Rivals including Travelers Cos. were stung by flooding in the U.S. in the period.

Premium revenue at AIG’s commercial segment slipped 11 percent to $4.5 billion. Schimek this year struck a risk-sharing deal in order to improve margins, which reduces sales.

Mortgage Insurance

AIG announced a deal in August to sell its mortgage guarantor to Arch Capital Group Ltd. for $3.4 billion while agreeing to reinsure some of the policies. The coverage guards lenders against borrower defaults. Profit at that unit, led by Donna DeMaio, slipped about 2 percent to $130 million. AIG has said it expects the transaction to be completed next year.

Hancock also reached a deal last month to sell commercial and consumer units in nations including Argentina and Turkey to Prem Watsa’s Fairfax Financial Holdings Ltd. The Toronto-based company will also acquire renewal rights on a portfolio of business written by AIG’s Central and Eastern European operations.

The institutional markets segment posted a loss of $526 million, compared with profit of $84 million, on costs tied to the structured settlements.

At the consumer business run by Kevin Hogan, results improved at the retirement operation, where profit jumped 74 percent to $1.11 billion, helped by improved performance from hedge fund holdings. The life segment posted profit of $98 million, compared with a loss of $40 million loss in last year’s third quarter. Personal insurance’s contribution more than doubled to $178 million on improved underwriting as expenses fell amid a decrease in direct-marketing and lower costs for employee compensation.

Hedge Funds