The insurer has received government loans and aid
Ailing insurer AIG has reported its smallest quarterly loss for 18 months.
It lost $4.35bn (£2.9bn) in the first three months of 2009 after racking up the biggest loss in corporate history of $61.7bn in the previous quarter.
The loss was primarily due to costs from the winding down of its financial products unit, which almost caused AIG's collapse last year.
AIG has been bailed out by the government amid fears that its failure would devastate financial markets.
The insurer's fourth-quarter loss was the biggest quarterly loss in corporate history.
The first-quarter loss reflected a $1.9bn restructuring charge linked to its financial products division.
The insurer warned that future quarters could include similar restructuring charges.
"We are making good progress in stabilising the business," Ed Liddy, AIG chief executive said. He added that AIG may eventually need more federal aid.
Ranked the 18th biggest company in the world by Forbes at the start of 2008, the insurer suffered massive losses relating to the problems afflicting the housing and credit markets.
The government has committed $180bn to AIG, in return for an 80% stake.
The government aid includes $80bn in loans, which AIG is seeking to pay back by sales.
The insurer has been heavily criticised for paying $165m in bonuses after taking the government money, although many top executives have agreed to return the money.